Correlation Between GM and Watches Of
Can any of the company-specific risk be diversified away by investing in both GM and Watches Of 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 Watches Of into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Watches of Switzerland, you can compare the effects of market volatilities on GM and Watches Of 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 Watches Of. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Watches Of.
Diversification Opportunities for GM and Watches Of
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GM and Watches is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Watches of Switzerland in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Watches of Switzerland 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 Watches Of. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Watches of Switzerland has no effect on the direction of GM i.e., GM and Watches Of go up and down completely randomly.
Pair Corralation between GM and Watches Of
Allowing for the 90-day total investment horizon GM is expected to generate 1.32 times less return on investment than Watches Of. But when comparing it to its historical volatility, General Motors is 1.54 times less risky than Watches Of. It trades about 0.08 of its potential returns per unit of risk. Watches of Switzerland is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 453.00 in Watches of Switzerland on September 3, 2024 and sell it today you would earn a total of 140.00 from holding Watches of Switzerland or generate 30.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Watches of Switzerland
Performance |
| Timeline |
| General Motors |
| Watches of Switzerland |
GM and Watches Of Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Watches Of
The main advantage of trading using opposite GM and Watches Of positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Watches Of 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 Watches Of will offset losses from the drop in Watches Of's long position.The idea behind General Motors and Watches of Switzerland 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.| Watches Of vs. Kering SA | Watches Of vs. Burberry Group Plc | Watches Of vs. Prada Spa PK | Watches Of vs. Compagnie Financire Richemont |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
Other Complementary Tools
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing |