Correlation Between GM and Alimentation Couchen
Can any of the company-specific risk be diversified away by investing in both GM and Alimentation Couchen 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 Alimentation Couchen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Alimentation Couchen Tard, you can compare the effects of market volatilities on GM and Alimentation Couchen 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 Alimentation Couchen. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Alimentation Couchen.
Diversification Opportunities for GM and Alimentation Couchen
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GM and Alimentation is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Alimentation Couchen Tard in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alimentation Couchen Tard 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 Alimentation Couchen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alimentation Couchen Tard has no effect on the direction of GM i.e., GM and Alimentation Couchen go up and down completely randomly.
Pair Corralation between GM and Alimentation Couchen
Allowing for the 90-day total investment horizon General Motors is expected to generate 2.06 times more return on investment than Alimentation Couchen. However, GM is 2.06 times more volatile than Alimentation Couchen Tard. It trades about -0.07 of its potential returns per unit of risk. Alimentation Couchen Tard is currently generating about -0.21 per unit of risk. If you would invest 5,492 in General Motors on December 1, 2024 and sell it today you would lose (579.00) from holding General Motors or give up 10.54% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 98.36% |
Values | Daily Returns |
General Motors vs. Alimentation Couchen Tard
Performance |
Timeline |
General Motors |
Alimentation Couchen Tard |
GM and Alimentation Couchen Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with GM and Alimentation Couchen
The main advantage of trading using opposite GM and Alimentation Couchen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Alimentation Couchen 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 Alimentation Couchen will offset losses from the drop in Alimentation Couchen's long position.The idea behind General Motors and Alimentation Couchen Tard 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.Alimentation Couchen vs. Metro Inc | Alimentation Couchen vs. Dollarama | Alimentation Couchen vs. Nutrien | Alimentation Couchen vs. Canadian Pacific Railway |
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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