Correlation Between General Motors and In Style
Can any of the company-specific risk be diversified away by investing in both General Motors and In Style 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 Motors and In Style into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors Co and in Style Group, you can compare the effects of market volatilities on General Motors and In Style 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 Motors with a short position of In Style. Check out your portfolio center. Please also check ongoing floating volatility patterns of General Motors and In Style.
Diversification Opportunities for General Motors and In Style
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between General and ITS is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding General Motors Co and in Style Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on in Style Group and General Motors 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 Motors Co are associated (or correlated) with In Style. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of in Style Group has no effect on the direction of General Motors i.e., General Motors and In Style go up and down completely randomly.
Pair Corralation between General Motors and In Style
Assuming the 90 days trading horizon General Motors Co is expected to under-perform the In Style. In addition to that, General Motors is 1.65 times more volatile than in Style Group. It trades about -0.28 of its total potential returns per unit of risk. in Style Group is currently generating about 0.1 per unit of volatility. If you would invest 380,000 in in Style Group on September 26, 2024 and sell it today you would earn a total of 10,000 from holding in Style Group or generate 2.63% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 95.45% |
Values | Daily Returns |
General Motors Co vs. in Style Group
Performance |
Timeline |
General Motors |
in Style Group |
General Motors and In Style Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with General Motors and In Style
The main advantage of trading using opposite General Motors and In Style positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if General Motors position performs unexpectedly, In Style 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 In Style will offset losses from the drop in In Style's long position.General Motors vs. Viridian Therapeutics | General Motors vs. AES Corp | General Motors vs. CVR Energy | General Motors vs. Nationwide Building Society |
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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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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