Correlation Between GM and VERIZON
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By analyzing existing cross correlation between General Motors and VERIZON MUNICATIONS INC, you can compare the effects of market volatilities on GM and VERIZON 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 VERIZON. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and VERIZON.
Diversification Opportunities for GM and VERIZON
Very good diversification
The 3 months correlation between GM and VERIZON is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and VERIZON MUNICATIONS INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VERIZON MUNICATIONS INC 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 VERIZON. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VERIZON MUNICATIONS INC has no effect on the direction of GM i.e., GM and VERIZON go up and down completely randomly.
Pair Corralation between GM and VERIZON
Allowing for the 90-day total investment horizon General Motors is expected to generate 0.91 times more return on investment than VERIZON. However, General Motors is 1.1 times less risky than VERIZON. It trades about 0.14 of its potential returns per unit of risk. VERIZON MUNICATIONS INC is currently generating about 0.07 per unit of risk. If you would invest 5,292 in General Motors on August 24, 2024 and sell it today you would earn a total of 276.00 from holding General Motors or generate 5.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 73.91% |
| Values | Daily Returns |
General Motors vs. VERIZON MUNICATIONS INC
Performance |
| Timeline |
| General Motors |
| VERIZON MUNICATIONS INC |
GM and VERIZON Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and VERIZON
The main advantage of trading using opposite GM and VERIZON positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, VERIZON 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 VERIZON will offset losses from the drop in VERIZON's long position.The idea behind General Motors and VERIZON MUNICATIONS INC 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.| VERIZON vs. The Coca Cola | VERIZON vs. JPMorgan Chase Co | VERIZON vs. Dupont De Nemours | VERIZON vs. Alcoa Corp |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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