Correlation Between GM and SOUTHERN
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By analyzing existing cross correlation between General Motors and SOUTHERN CALIF EDISON, you can compare the effects of market volatilities on GM and SOUTHERN 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 SOUTHERN. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and SOUTHERN.
Diversification Opportunities for GM and SOUTHERN
Modest diversification
The 3 months correlation between GM and SOUTHERN is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and SOUTHERN CALIF EDISON in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SOUTHERN CALIF EDISON 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 SOUTHERN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SOUTHERN CALIF EDISON has no effect on the direction of GM i.e., GM and SOUTHERN go up and down completely randomly.
Pair Corralation between GM and SOUTHERN
Allowing for the 90-day total investment horizon General Motors is expected to under-perform the SOUTHERN. In addition to that, GM is 2.15 times more volatile than SOUTHERN CALIF EDISON. It trades about -0.06 of its total potential returns per unit of risk. SOUTHERN CALIF EDISON is currently generating about -0.11 per unit of volatility. If you would invest 10,190 in SOUTHERN CALIF EDISON on November 4, 2024 and sell it today you would lose (278.00) from holding SOUTHERN CALIF EDISON or give up 2.73% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 90.0% |
| Values | Daily Returns |
General Motors vs. SOUTHERN CALIF EDISON
Performance |
| Timeline |
| General Motors |
| SOUTHERN CALIF EDISON |
GM and SOUTHERN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and SOUTHERN
The main advantage of trading using opposite GM and SOUTHERN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, SOUTHERN 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 SOUTHERN will offset losses from the drop in SOUTHERN's long position.The idea behind General Motors and SOUTHERN CALIF EDISON 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.| SOUTHERN vs. AEP TEX INC | SOUTHERN vs. US BANK NATIONAL | SOUTHERN vs. LightPath Technologies | SOUTHERN vs. Reliance Global Group |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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