Correlation Between GM and Petrleos
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By analyzing existing cross correlation between General Motors and Petrleos Mexicanos 425, you can compare the effects of market volatilities on GM and Petrleos 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 Petrleos. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Petrleos.
Diversification Opportunities for GM and Petrleos
Very good diversification
The 3 months correlation between GM and Petrleos is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Petrleos Mexicanos 425 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Petrleos Mexicanos 425 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 Petrleos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Petrleos Mexicanos 425 has no effect on the direction of GM i.e., GM and Petrleos go up and down completely randomly.
Pair Corralation between GM and Petrleos
Allowing for the 90-day total investment horizon General Motors is expected to generate 2.18 times more return on investment than Petrleos. However, GM is 2.18 times more volatile than Petrleos Mexicanos 425. It trades about 0.07 of its potential returns per unit of risk. Petrleos Mexicanos 425 is currently generating about 0.0 per unit of risk. If you would invest 3,536 in General Motors on August 31, 2024 and sell it today you would earn a total of 2,023 from holding General Motors or generate 57.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.4% |
| Values | Daily Returns |
General Motors vs. Petrleos Mexicanos 425
Performance |
| Timeline |
| General Motors |
| Petrleos Mexicanos 425 |
GM and Petrleos Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Petrleos
The main advantage of trading using opposite GM and Petrleos positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Petrleos 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 Petrleos will offset losses from the drop in Petrleos' long position.The idea behind General Motors and Petrleos Mexicanos 425 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.| Petrleos vs. SEI Investments | Petrleos vs. NioCorp Developments Ltd | Petrleos vs. Small Cap Premium | Petrleos vs. Mangazeya Mining |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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