Correlation Between GM and CONSOLIDATED
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By analyzing existing cross correlation between General Motors and CONSOLIDATED EDISON N, you can compare the effects of market volatilities on GM and CONSOLIDATED and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in GM with a short position of CONSOLIDATED. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and CONSOLIDATED.
Diversification Opportunities for GM and CONSOLIDATED
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between GM and CONSOLIDATED is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and CONSOLIDATED EDISON N in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CONSOLIDATED EDISON and GM is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on General Motors are associated (or correlated) with CONSOLIDATED. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CONSOLIDATED EDISON has no effect on the direction of GM i.e., GM and CONSOLIDATED go up and down completely randomly.
Pair Corralation between GM and CONSOLIDATED
Allowing for the 90-day total investment horizon GM is expected to generate 54.08 times less return on investment than CONSOLIDATED. But when comparing it to its historical volatility, General Motors is 40.4 times less risky than CONSOLIDATED. It trades about 0.06 of its potential returns per unit of risk. CONSOLIDATED EDISON N is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 11,572 in CONSOLIDATED EDISON N on August 31, 2024 and sell it today you would lose (124.00) from holding CONSOLIDATED EDISON N or give up 1.07% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 59.62% |
| Values | Daily Returns |
General Motors vs. CONSOLIDATED EDISON N
Performance |
| Timeline |
| General Motors |
| CONSOLIDATED EDISON |
GM and CONSOLIDATED Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and CONSOLIDATED
The main advantage of trading using opposite GM and CONSOLIDATED positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, CONSOLIDATED can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in CONSOLIDATED will offset losses from the drop in CONSOLIDATED's long position.The idea behind General Motors and CONSOLIDATED EDISON N pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| CONSOLIDATED vs. AEP TEX INC | CONSOLIDATED vs. US BANK NATIONAL | CONSOLIDATED vs. International Business Machines | CONSOLIDATED vs. Intel |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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