Correlation Between GM and Sand Nisko

Can any of the company-specific risk be diversified away by investing in both GM and Sand Nisko 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 GM and Sand Nisko into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between General Motors and Sand Nisko Capital, you can compare the effects of market volatilities on GM and Sand Nisko 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 GM with a short position of Sand Nisko. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Sand Nisko.

Diversification Opportunities for GM and Sand Nisko

-0.47

Correlation Coefficient

GM  Sand Nisko

Very good diversification

The 3 months correlation between GM and Sand is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Sand Nisko Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sand Nisko Capital and GM 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 are associated (or correlated) with Sand Nisko. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sand Nisko Capital has no effect on the direction of GM i.e., GM and Sand Nisko go up and down completely randomly.

Pair Corralation between GM and Sand Nisko

Allowing for the 90-day total investment horizon General Motors is expected to generate 0.38 times more return on investment than Sand Nisko. However, General Motors is 2.63 times less risky than Sand Nisko. It trades about -0.15 of its potential returns per unit of risk. Sand Nisko Capital is currently generating about -0.19 per unit of risk. If you would invest  5,499  in General Motors on September 20, 2024 and sell it today you would lose (465.00) from holding General Motors or give up 8.46% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.65%
Values	Daily Returns

General Motors  vs.  Sand Nisko Capital

General Motors

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in General Motors are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy primary indicators, GM is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Sand Nisko Capital

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sand Nisko Capital are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Sand Nisko disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GM and Sand Nisko

The main advantage of trading using opposite GM and Sand Nisko positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Sand Nisko 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 Sand Nisko will offset losses from the drop in Sand Nisko's long position.

The idea behind General Motors and Sand Nisko Capital 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.

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 Global Correlations module to find global opportunities by holding instruments from different markets.