Correlation Between GM and Cullen International

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Can any of the company-specific risk be diversified away by investing in both GM and Cullen International 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 Cullen International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Cullen International High, you can compare the effects of market volatilities on GM and Cullen International 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 Cullen International. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Cullen International.

Diversification Opportunities for GM and Cullen International

-0.63
  Correlation Coefficient

Excellent diversification

The 3 months correlation between GM and Cullen is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Cullen International High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cullen International High 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 Cullen International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cullen International High has no effect on the direction of GM i.e., GM and Cullen International go up and down completely randomly.

Pair Corralation between GM and Cullen International

If you would invest  5,370  in General Motors on September 6, 2024 and sell it today you would lose (34.00) from holding General Motors or give up 0.63% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy95.45%
ValuesDaily Returns

General Motors  vs.  Cullen International High

 Performance 
       Timeline  
General Motors 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in General Motors are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very weak primary indicators, GM displayed solid returns over the last few months and may actually be approaching a breakup point.
Cullen International High 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Cullen International High has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Cullen International is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

GM and Cullen International Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with GM and Cullen International

The main advantage of trading using opposite GM and Cullen International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Cullen International 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 Cullen International will offset losses from the drop in Cullen International's long position.
The idea behind General Motors and Cullen International High 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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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 Anywhere module to track or share privately all of your investments from the convenience of any device.

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