Correlation Between GM and Vystar Corp
Can any of the company-specific risk be diversified away by investing in both GM and Vystar Corp 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 Vystar Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Vystar Corp, you can compare the effects of market volatilities on GM and Vystar Corp 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 Vystar Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Vystar Corp.
Diversification Opportunities for GM and Vystar Corp
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GM and Vystar is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Vystar Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vystar Corp 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 Vystar Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vystar Corp has no effect on the direction of GM i.e., GM and Vystar Corp go up and down completely randomly.
Pair Corralation between GM and Vystar Corp
Allowing for the 90-day total investment horizon GM is expected to generate 25.12 times less return on investment than Vystar Corp. But when comparing it to its historical volatility, General Motors is 22.77 times less risky than Vystar Corp. It trades about 0.17 of its potential returns per unit of risk. Vystar Corp is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 3.50 in Vystar Corp on September 1, 2024 and sell it today you would lose (1.10) from holding Vystar Corp or give up 31.43% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Vystar Corp
Performance |
| Timeline |
| General Motors |
| Vystar Corp |
GM and Vystar Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Vystar Corp
The main advantage of trading using opposite GM and Vystar Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Vystar Corp 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 Vystar Corp will offset losses from the drop in Vystar Corp's long position.The idea behind General Motors and Vystar Corp 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.| Vystar Corp vs. Sherwin Williams Co | Vystar Corp vs. Air Liquide SA | Vystar Corp vs. Air Products and | Vystar Corp vs. Ecolab Inc |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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