Correlation Between GM and INTEL
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By analyzing existing cross correlation between General Motors and INTEL PORATION, you can compare the effects of market volatilities on GM and INTEL 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 INTEL. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and INTEL.
Diversification Opportunities for GM and INTEL
Modest diversification
The 3 months correlation between GM and INTEL is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and INTEL PORATION in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INTEL PORATION 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 INTEL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INTEL PORATION has no effect on the direction of GM i.e., GM and INTEL go up and down completely randomly.
Pair Corralation between GM and INTEL
Allowing for the 90-day total investment horizon General Motors is expected to generate 2.13 times more return on investment than INTEL. However, GM is 2.13 times more volatile than INTEL PORATION. It trades about 0.08 of its potential returns per unit of risk. INTEL PORATION is currently generating about 0.03 per unit of risk. If you would invest 4,551 in General Motors on August 30, 2024 and sell it today you would earn a total of 999.00 from holding General Motors or generate 21.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.41% |
| Values | Daily Returns |
General Motors vs. INTEL PORATION
Performance |
| Timeline |
| General Motors |
| INTEL PORATION |
GM and INTEL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and INTEL
The main advantage of trading using opposite GM and INTEL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, INTEL 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 INTEL will offset losses from the drop in INTEL's long position.The idea behind General Motors and INTEL PORATION 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.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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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