Correlation Between Isuzu Motors and GM
Can any of the company-specific risk be diversified away by investing in both Isuzu Motors and GM 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 Isuzu Motors and GM into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Isuzu Motors Limited and General Motors, you can compare the effects of market volatilities on Isuzu Motors and GM 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 Isuzu Motors with a short position of GM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Isuzu Motors and GM.
Diversification Opportunities for Isuzu Motors and GM
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Isuzu and GM is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Isuzu Motors Limited and General Motors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General Motors and Isuzu Motors 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 Isuzu Motors Limited are associated (or correlated) with GM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of General Motors has no effect on the direction of Isuzu Motors i.e., Isuzu Motors and GM go up and down completely randomly.
Pair Corralation between Isuzu Motors and GM
Assuming the 90 days horizon Isuzu Motors Limited is expected to generate 1.49 times more return on investment than GM. However, Isuzu Motors is 1.49 times more volatile than General Motors. It trades about 0.15 of its potential returns per unit of risk. General Motors is currently generating about 0.16 per unit of risk. If you would invest 1,205 in Isuzu Motors Limited on September 2, 2024 and sell it today you would earn a total of 145.00 from holding Isuzu Motors Limited or generate 12.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Isuzu Motors Limited vs. General Motors
Performance |
| Timeline |
| Isuzu Motors Limited |
| General Motors |
Isuzu Motors and GM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Isuzu Motors and GM
The main advantage of trading using opposite Isuzu Motors and GM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Isuzu Motors position performs unexpectedly, GM 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 GM will offset losses from the drop in GM's long position.| Isuzu Motors vs. General Motors | Isuzu Motors vs. Tesla Inc | Isuzu Motors vs. Rivian Automotive | Isuzu Motors vs. Nio Class A |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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