Correlation Between GENERAL and Pinterest

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Can any of the company-specific risk be diversified away by investing in both GENERAL and Pinterest 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 GENERAL and Pinterest into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GENERAL ELEC CAP and Pinterest, you can compare the effects of market volatilities on GENERAL and Pinterest 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 GENERAL with a short position of Pinterest. Check out your portfolio center. Please also check ongoing floating volatility patterns of GENERAL and Pinterest.

Diversification Opportunities for GENERAL and Pinterest

0.51
  Correlation Coefficient

Very weak diversification

The 3 months correlation between GENERAL and Pinterest is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding GENERAL ELEC CAP and Pinterest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pinterest and GENERAL 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 GENERAL ELEC CAP are associated (or correlated) with Pinterest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pinterest has no effect on the direction of GENERAL i.e., GENERAL and Pinterest go up and down completely randomly.

Pair Corralation between GENERAL and Pinterest

Assuming the 90 days trading horizon GENERAL ELEC CAP is expected to under-perform the Pinterest. But the bond apears to be less risky and, when comparing its historical volatility, GENERAL ELEC CAP is 3.44 times less risky than Pinterest. The bond trades about -0.56 of its potential returns per unit of risk. The Pinterest is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  3,226  in Pinterest on August 27, 2024 and sell it today you would lose (175.00) from holding Pinterest or give up 5.42% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy23.81%
ValuesDaily Returns

GENERAL ELEC CAP  vs.  Pinterest

 Performance 
       Timeline  
GENERAL ELEC CAP 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days GENERAL ELEC CAP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for GENERAL ELEC CAP investors.
Pinterest 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Pinterest has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Pinterest is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

GENERAL and Pinterest Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with GENERAL and Pinterest

The main advantage of trading using opposite GENERAL and Pinterest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GENERAL position performs unexpectedly, Pinterest 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 Pinterest will offset losses from the drop in Pinterest's long position.
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The idea behind GENERAL ELEC CAP and Pinterest pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..

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