Correlation Between GM and 512807AN8
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By analyzing existing cross correlation between General Motors and LAM RESH P, you can compare the effects of market volatilities on GM and 512807AN8 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 512807AN8. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and 512807AN8.
Diversification Opportunities for GM and 512807AN8
Very good diversification
The 3 months correlation between GM and 512807AN8 is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and LAM RESH P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LAM RESH P 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 512807AN8. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LAM RESH P has no effect on the direction of GM i.e., GM and 512807AN8 go up and down completely randomly.
Pair Corralation between GM and 512807AN8
Allowing for the 90-day total investment horizon General Motors is expected to generate 11.52 times more return on investment than 512807AN8. However, GM is 11.52 times more volatile than LAM RESH P. It trades about 0.11 of its potential returns per unit of risk. LAM RESH P is currently generating about 0.02 per unit of risk. If you would invest 3,348 in General Motors on September 3, 2024 and sell it today you would earn a total of 2,156 from holding General Motors or generate 64.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 93.12% |
| Values | Daily Returns |
General Motors vs. LAM RESH P
Performance |
| Timeline |
| General Motors |
| LAM RESH P |
GM and 512807AN8 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and 512807AN8
The main advantage of trading using opposite GM and 512807AN8 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, 512807AN8 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 512807AN8 will offset losses from the drop in 512807AN8's long position.The idea behind General Motors and LAM RESH P 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.| 512807AN8 vs. The Travelers Companies | 512807AN8 vs. GE Aerospace | 512807AN8 vs. Walmart | 512807AN8 vs. Pfizer Inc |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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