Correlation Between GM and ENERGY
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By analyzing existing cross correlation between General Motors and ENERGY TRANSFER PARTNERS, you can compare the effects of market volatilities on GM and ENERGY 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 ENERGY. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and ENERGY.
Diversification Opportunities for GM and ENERGY
Pay attention - limited upside
The 3 months correlation between GM and ENERGY is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and ENERGY TRANSFER PARTNERS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ENERGY TRANSFER PARTNERS 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 ENERGY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ENERGY TRANSFER PARTNERS has no effect on the direction of GM i.e., GM and ENERGY go up and down completely randomly.
Pair Corralation between GM and ENERGY
Allowing for the 90-day total investment horizon General Motors is expected to generate 1.41 times more return on investment than ENERGY. However, GM is 1.41 times more volatile than ENERGY TRANSFER PARTNERS. It trades about 0.32 of its potential returns per unit of risk. ENERGY TRANSFER PARTNERS is currently generating about -0.14 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 | Weak |
| Accuracy | 71.43% |
| Values | Daily Returns |
General Motors vs. ENERGY TRANSFER PARTNERS
Performance |
| Timeline |
| General Motors |
| ENERGY TRANSFER PARTNERS |
GM and ENERGY Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and ENERGY
The main advantage of trading using opposite GM and ENERGY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, ENERGY 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 ENERGY will offset losses from the drop in ENERGY's long position.The idea behind General Motors and ENERGY TRANSFER PARTNERS 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.| ENERGY vs. Addus HomeCare | ENERGY vs. Weyco Group | ENERGY vs. MI Homes | ENERGY vs. Hudson Pacific Properties |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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