Correlation Between IPC MEXICO and GM
Can any of the company-specific risk be diversified away by investing in both IPC MEXICO 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 IPC MEXICO and GM into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IPC MEXICO and General Motors, you can compare the effects of market volatilities on IPC MEXICO 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 IPC MEXICO with a short position of GM. Check out your portfolio center. Please also check ongoing floating volatility patterns of IPC MEXICO and GM.
Diversification Opportunities for IPC MEXICO and GM
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between IPC and GM is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding IPC MEXICO and General Motors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General Motors and IPC MEXICO 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 IPC MEXICO 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 IPC MEXICO i.e., IPC MEXICO and GM go up and down completely randomly.
Pair Corralation between IPC MEXICO and GM
Assuming the 90 days trading horizon IPC MEXICO is expected to under-perform the GM. But the index apears to be less risky and, when comparing its historical volatility, IPC MEXICO is 3.81 times less risky than GM. The index trades about -0.11 of its potential returns per unit of risk. The General Motors is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 102,000 in General Motors on September 1, 2024 and sell it today you would earn a total of 12,200 from holding General Motors or generate 11.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
IPC MEXICO vs. General Motors
Performance |
| Timeline |
IPC MEXICO and GM Volatility Contrast
Predicted Return Density |
| Returns |
IPC MEXICO
Pair trading matchups for IPC MEXICO
General Motors
Pair trading matchups for GM
Pair Trading with IPC MEXICO and GM
The main advantage of trading using opposite IPC MEXICO and GM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IPC MEXICO 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.| IPC MEXICO vs. First Republic Bank | IPC MEXICO vs. McEwen Mining | IPC MEXICO vs. Applied Materials | IPC MEXICO vs. CVS Health |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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