Correlation Between GM and CleanCore Solutions
Can any of the company-specific risk be diversified away by investing in both GM and CleanCore Solutions 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 CleanCore Solutions into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and CleanCore Solutions, you can compare the effects of market volatilities on GM and CleanCore Solutions 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 CleanCore Solutions. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and CleanCore Solutions.
Diversification Opportunities for GM and CleanCore Solutions
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between GM and CleanCore is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and CleanCore Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CleanCore Solutions 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 CleanCore Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CleanCore Solutions has no effect on the direction of GM i.e., GM and CleanCore Solutions go up and down completely randomly.
Pair Corralation between GM and CleanCore Solutions
Allowing for the 90-day total investment horizon General Motors is expected to generate 0.33 times more return on investment than CleanCore Solutions. However, General Motors is 3.03 times less risky than CleanCore Solutions. It trades about 0.09 of its potential returns per unit of risk. CleanCore Solutions is currently generating about -0.06 per unit of risk. If you would invest 4,044 in General Motors on September 1, 2024 and sell it today you would earn a total of 1,515 from holding General Motors or generate 37.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 80.32% |
| Values | Daily Returns |
General Motors vs. CleanCore Solutions
Performance |
| Timeline |
| General Motors |
| CleanCore Solutions |
GM and CleanCore Solutions Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and CleanCore Solutions
The main advantage of trading using opposite GM and CleanCore Solutions positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, CleanCore Solutions 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 CleanCore Solutions will offset losses from the drop in CleanCore Solutions' long position.The idea behind General Motors and CleanCore Solutions 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.| CleanCore Solutions vs. CRA International | CleanCore Solutions vs. ICF International | CleanCore Solutions vs. Forrester Research | CleanCore Solutions vs. Huron Consulting Group |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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