Correlation Between GM and DOMINION
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By analyzing existing cross correlation between General Motors and DOMINION RES INC, you can compare the effects of market volatilities on GM and DOMINION 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 DOMINION. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and DOMINION.
Diversification Opportunities for GM and DOMINION
Pay attention - limited upside
The 3 months correlation between GM and DOMINION is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and DOMINION RES INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DOMINION RES INC 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 DOMINION. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DOMINION RES INC has no effect on the direction of GM i.e., GM and DOMINION go up and down completely randomly.
Pair Corralation between GM and DOMINION
Allowing for the 90-day total investment horizon General Motors is expected to generate 4.24 times more return on investment than DOMINION. However, GM is 4.24 times more volatile than DOMINION RES INC. It trades about 0.32 of its potential returns per unit of risk. DOMINION RES INC is currently generating about 0.04 per unit of risk. If you would invest 5,273 in General Motors on August 28, 2024 and sell it today you would earn a total of 747.00 from holding General Motors or generate 14.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
General Motors vs. DOMINION RES INC
Performance |
| Timeline |
| General Motors |
| DOMINION RES INC |
GM and DOMINION Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and DOMINION
The main advantage of trading using opposite GM and DOMINION positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, DOMINION 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 DOMINION will offset losses from the drop in DOMINION's long position.The idea behind General Motors and DOMINION RES INC 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.| DOMINION vs. AEP TEX INC | DOMINION vs. US BANK NATIONAL | DOMINION vs. Dupont De Nemours | DOMINION vs. The Travelers Companies |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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