Correlation Between Stellantis and GM
Can any of the company-specific risk be diversified away by investing in both Stellantis 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 Stellantis and GM into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stellantis NV and General Motors, you can compare the effects of market volatilities on Stellantis 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 Stellantis with a short position of GM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stellantis and GM.
Diversification Opportunities for Stellantis and GM
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Stellantis and GM is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Stellantis NV and General Motors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General Motors and Stellantis 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 Stellantis NV 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 Stellantis i.e., Stellantis and GM go up and down completely randomly.
Pair Corralation between Stellantis and GM
Given the investment horizon of 90 days Stellantis NV is expected to under-perform the GM. But the stock apears to be less risky and, when comparing its historical volatility, Stellantis NV is 1.12 times less risky than GM. The stock trades about -0.06 of its potential returns per unit of risk. The General Motors is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest 5,273 in General Motors on August 27, 2024 and sell it today you would earn a total of 747.00 from holding General Motors or generate 14.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Stellantis NV vs. General Motors
Performance |
| Timeline |
| Stellantis NV |
| General Motors |
Stellantis and GM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stellantis and GM
The main advantage of trading using opposite Stellantis and GM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stellantis 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.| Stellantis vs. Porsche Automobile Holding | Stellantis vs. Toyota Motor | Stellantis vs. Honda Motor Co | Stellantis vs. General Motors |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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