Correlation Between GM and Flughafen Zürich
Can any of the company-specific risk be diversified away by investing in both GM and Flughafen Zürich at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining GM and Flughafen Zürich into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Flughafen Zrich AG, you can compare the effects of market volatilities on GM and Flughafen Zürich 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 Flughafen Zürich. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Flughafen Zürich.
Diversification Opportunities for GM and Flughafen Zürich
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between GM and Flughafen is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Flughafen Zrich AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flughafen Zrich AG 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 Flughafen Zürich. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flughafen Zrich AG has no effect on the direction of GM i.e., GM and Flughafen Zürich go up and down completely randomly.
Pair Corralation between GM and Flughafen Zürich
Allowing for the 90-day total investment horizon General Motors is expected to generate 1.31 times more return on investment than Flughafen Zürich. However, GM is 1.31 times more volatile than Flughafen Zrich AG. It trades about 0.09 of its potential returns per unit of risk. Flughafen Zrich AG is currently generating about 0.04 per unit of risk. If you would invest 4,044 in General Motors on September 1, 2024 and sell it today you would earn a total of 1,515 from holding General Motors or generate 37.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 89.36% |
| Values | Daily Returns |
General Motors vs. Flughafen Zrich AG
Performance |
| Timeline |
| General Motors |
| Flughafen Zrich AG |
GM and Flughafen Zürich Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Flughafen Zürich
The main advantage of trading using opposite GM and Flughafen Zürich positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Flughafen Zürich 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 Flughafen Zürich will offset losses from the drop in Flughafen Zürich's long position.The idea behind General Motors and Flughafen Zrich AG 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.| Flughafen Zürich vs. Aena SME SA | Flughafen Zürich vs. Auckland International Airport | Flughafen Zürich vs. Aeroports de Paris | Flughafen Zürich vs. Airports of Thailand |
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 CEOs Directory module to screen CEOs from public companies around the world.
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