Correlation Between GM and Wacker Neuson
Can any of the company-specific risk be diversified away by investing in both GM and Wacker Neuson 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 Wacker Neuson into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Wacker Neuson SE, you can compare the effects of market volatilities on GM and Wacker Neuson 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 Wacker Neuson. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Wacker Neuson.
Diversification Opportunities for GM and Wacker Neuson
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between GM and Wacker is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Wacker Neuson SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wacker Neuson SE 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 Wacker Neuson. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wacker Neuson SE has no effect on the direction of GM i.e., GM and Wacker Neuson go up and down completely randomly.
Pair Corralation between GM and Wacker Neuson
Allowing for the 90-day total investment horizon General Motors is expected to generate 1.22 times more return on investment than Wacker Neuson. However, GM is 1.22 times more volatile than Wacker Neuson SE. It trades about 0.05 of its potential returns per unit of risk. Wacker Neuson SE is currently generating about 0.0 per unit of risk. If you would invest 3,692 in General Motors on September 5, 2024 and sell it today you would earn a total of 1,674 from holding General Motors or generate 45.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 98.02% |
| Values | Daily Returns |
General Motors vs. Wacker Neuson SE
Performance |
| Timeline |
| General Motors |
| Wacker Neuson SE |
GM and Wacker Neuson Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Wacker Neuson
The main advantage of trading using opposite GM and Wacker Neuson positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Wacker Neuson 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 Wacker Neuson will offset losses from the drop in Wacker Neuson's long position.The idea behind General Motors and Wacker Neuson SE 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.| Wacker Neuson vs. PUBLIC STORAGE PRFO | Wacker Neuson vs. UMC Electronics Co | Wacker Neuson vs. DATAGROUP SE | Wacker Neuson vs. LPKF Laser Electronics |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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