Correlation Between Pets At and General Motors
Can any of the company-specific risk be diversified away by investing in both Pets At and General Motors 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 Pets At and General Motors into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pets at Home and General Motors Co, you can compare the effects of market volatilities on Pets At and General Motors 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 Pets At with a short position of General Motors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pets At and General Motors.
Diversification Opportunities for Pets At and General Motors
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Pets and General is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Pets at Home and General Motors Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General Motors and Pets At 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 Pets at Home are associated (or correlated) with General Motors. 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 Pets At i.e., Pets At and General Motors go up and down completely randomly.
Pair Corralation between Pets At and General Motors
Assuming the 90 days trading horizon Pets at Home is expected to generate 0.75 times more return on investment than General Motors. However, Pets at Home is 1.34 times less risky than General Motors. It trades about 0.23 of its potential returns per unit of risk. General Motors Co is currently generating about -0.05 per unit of risk. If you would invest 20,360 in Pets at Home on November 3, 2024 and sell it today you would earn a total of 2,240 from holding Pets at Home or generate 11.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pets at Home vs. General Motors Co
Performance |
| Timeline |
| Pets at Home |
| General Motors |
Pets At and General Motors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pets At and General Motors
The main advantage of trading using opposite Pets At and General Motors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pets At position performs unexpectedly, General Motors 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 General Motors will offset losses from the drop in General Motors' long position.| Pets At vs. Broadcom | Pets At vs. EVS Broadcast Equipment | Pets At vs. Lowland Investment Co | Pets At vs. Lindsell Train Investment |
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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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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