Correlation Between GM and PROVIDENT
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By analyzing existing cross correlation between General Motors and PROVIDENT INC 725, you can compare the effects of market volatilities on GM and PROVIDENT 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 PROVIDENT. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and PROVIDENT.
Diversification Opportunities for GM and PROVIDENT
Modest diversification
The 3 months correlation between GM and PROVIDENT is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and PROVIDENT INC 725 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PROVIDENT INC 725 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 PROVIDENT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PROVIDENT INC 725 has no effect on the direction of GM i.e., GM and PROVIDENT go up and down completely randomly.
Pair Corralation between GM and PROVIDENT
Allowing for the 90-day total investment horizon General Motors is expected to generate 1.63 times more return on investment than PROVIDENT. However, GM is 1.63 times more volatile than PROVIDENT INC 725. It trades about 0.05 of its potential returns per unit of risk. PROVIDENT INC 725 is currently generating about -0.01 per unit of risk. If you would invest 3,334 in General Motors on December 11, 2024 and sell it today you would earn a total of 1,474 from holding General Motors or generate 44.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 63.89% |
| Values | Daily Returns |
General Motors vs. PROVIDENT INC 725
Performance |
| Timeline |
| General Motors |
| PROVIDENT INC 725 |
GM and PROVIDENT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and PROVIDENT
The main advantage of trading using opposite GM and PROVIDENT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, PROVIDENT 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 PROVIDENT will offset losses from the drop in PROVIDENT's long position.The idea behind General Motors and PROVIDENT INC 725 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.| PROVIDENT vs. Enersys | ||
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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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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