Correlation Between Unity Software and General Motors
Can any of the company-specific risk be diversified away by investing in both Unity Software 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 Unity Software and General Motors into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Unity Software and General Motors, you can compare the effects of market volatilities on Unity Software 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 Unity Software with a short position of General Motors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Unity Software and General Motors.
Diversification Opportunities for Unity Software and General Motors
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Unity and General is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Unity Software and General Motors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General Motors and Unity Software 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 Unity Software 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 Unity Software i.e., Unity Software and General Motors go up and down completely randomly.
Pair Corralation between Unity Software and General Motors
Assuming the 90 days trading horizon Unity Software is expected to generate 4.77 times less return on investment than General Motors. In addition to that, Unity Software is 1.72 times more volatile than General Motors. It trades about 0.01 of its total potential returns per unit of risk. General Motors is currently generating about 0.1 per unit of volatility. If you would invest 4,097 in General Motors on September 12, 2024 and sell it today you would earn a total of 4,022 from holding General Motors or generate 98.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.7% |
| Values | Daily Returns |
Unity Software vs. General Motors
Performance |
| Timeline |
| Unity Software |
| General Motors |
Unity Software and General Motors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Unity Software and General Motors
The main advantage of trading using opposite Unity Software and General Motors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Unity Software 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.| Unity Software vs. ServiceNow | Unity Software vs. Uber Technologies | Unity Software vs. Shopify | Unity Software vs. Autodesk |
| General Motors vs. Unifique Telecomunicaes SA | General Motors vs. Delta Air Lines | General Motors vs. Charter Communications | General Motors vs. Autohome |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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