Correlation Between GM and Ardagh Group

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

By analyzing existing cross correlation between General Motors and Ardagh Group SA, you can compare the effects of market volatilities on GM and Ardagh Group 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 Ardagh Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Ardagh Group.

Diversification Opportunities for GM and Ardagh Group

0.0

Correlation Coefficient

GM  Ardagh Group

Pay attention - limited upside

The 3 months correlation between GM and Ardagh is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Ardagh Group SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ardagh Group SA 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 Ardagh Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ardagh Group SA has no effect on the direction of GM i.e., GM and Ardagh Group go up and down completely randomly.

Pair Corralation between GM and Ardagh Group

If you would invest  4,559  in General Motors on December 25, 2024 and sell it today you would earn a total of  587.00  from holding General Motors or generate 12.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

General Motors  vs.  Ardagh Group SA

General Motors

Risk-Adjusted Performance

Very Weak

Over the last 90 days General Motors has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Ardagh Group SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ardagh Group SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Ardagh Group is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with GM and Ardagh Group

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

The idea behind General Motors and Ardagh Group SA 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.