Correlation Between GM and Wolters Kluwer
Can any of the company-specific risk be diversified away by investing in both GM and Wolters Kluwer 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 Wolters Kluwer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Wolters Kluwer NV, you can compare the effects of market volatilities on GM and Wolters Kluwer 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 Wolters Kluwer. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Wolters Kluwer.
Diversification Opportunities for GM and Wolters Kluwer
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GM and Wolters is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Wolters Kluwer NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wolters Kluwer NV 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 Wolters Kluwer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wolters Kluwer NV has no effect on the direction of GM i.e., GM and Wolters Kluwer go up and down completely randomly.
Pair Corralation between GM and Wolters Kluwer
Allowing for the 90-day total investment horizon General Motors is expected to generate 1.82 times more return on investment than Wolters Kluwer. However, GM is 1.82 times more volatile than Wolters Kluwer NV. It trades about 0.09 of its potential returns per unit of risk. Wolters Kluwer NV is currently generating about 0.1 per unit of risk. If you would invest 3,292 in General Motors on August 30, 2024 and sell it today you would earn a total of 2,258 from holding General Motors or generate 68.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Wolters Kluwer NV
Performance |
| Timeline |
| General Motors |
| Wolters Kluwer NV |
GM and Wolters Kluwer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Wolters Kluwer
The main advantage of trading using opposite GM and Wolters Kluwer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Wolters Kluwer 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 Wolters Kluwer will offset losses from the drop in Wolters Kluwer's long position.The idea behind General Motors and Wolters Kluwer NV 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.| Wolters Kluwer vs. Deere Company | Wolters Kluwer vs. Columbus McKinnon | Wolters Kluwer vs. Hyster Yale Materials Handling | Wolters Kluwer vs. Manitowoc |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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