Correlation Between GM and AM Locales
Can any of the company-specific risk be diversified away by investing in both GM and AM Locales 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 AM Locales into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and AM Locales Property, you can compare the effects of market volatilities on GM and AM Locales 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 AM Locales. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and AM Locales.
Diversification Opportunities for GM and AM Locales
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GM and YAML is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and AM Locales Property in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AM Locales Property 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 AM Locales. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AM Locales Property has no effect on the direction of GM i.e., GM and AM Locales go up and down completely randomly.
Pair Corralation between GM and AM Locales
Allowing for the 90-day total investment horizon General Motors is expected to generate 5.71 times more return on investment than AM Locales. However, GM is 5.71 times more volatile than AM Locales Property. It trades about 0.07 of its potential returns per unit of risk. AM Locales Property is currently generating about 0.0 per unit of risk. If you would invest 3,536 in General Motors on August 31, 2024 and sell it today you would earn a total of 2,023 from holding General Motors or generate 57.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 98.93% |
| Values | Daily Returns |
General Motors vs. AM Locales Property
Performance |
| Timeline |
| General Motors |
| AM Locales Property |
GM and AM Locales Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and AM Locales
The main advantage of trading using opposite GM and AM Locales positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, AM Locales 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 AM Locales will offset losses from the drop in AM Locales' long position.The idea behind General Motors and AM Locales Property 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.| AM Locales vs. Labiana Health SA | AM Locales vs. Vytrus Biotech SA | AM Locales vs. All Iron Re | AM Locales vs. Energy Solar Tech |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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