Correlation Between GM and SMUCKER
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By analyzing existing cross correlation between General Motors and SMUCKER J M, you can compare the effects of market volatilities on GM and SMUCKER 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 SMUCKER. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and SMUCKER.
Diversification Opportunities for GM and SMUCKER
Good diversification
The 3 months correlation between GM and SMUCKER is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and SMUCKER J M in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SMUCKER J M 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 SMUCKER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SMUCKER J M has no effect on the direction of GM i.e., GM and SMUCKER go up and down completely randomly.
Pair Corralation between GM and SMUCKER
Allowing for the 90-day total investment horizon GM is expected to generate 1.37 times less return on investment than SMUCKER. In addition to that, GM is 2.48 times more volatile than SMUCKER J M. It trades about 0.12 of its total potential returns per unit of risk. SMUCKER J M is currently generating about 0.41 per unit of volatility. If you would invest 8,376 in SMUCKER J M on August 31, 2024 and sell it today you would earn a total of 382.00 from holding SMUCKER J M or generate 4.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 43.48% |
| Values | Daily Returns |
General Motors vs. SMUCKER J M
Performance |
| Timeline |
| General Motors |
| SMUCKER J M |
GM and SMUCKER Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and SMUCKER
The main advantage of trading using opposite GM and SMUCKER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, SMUCKER 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 SMUCKER will offset losses from the drop in SMUCKER's long position.The idea behind General Motors and SMUCKER J M 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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