Correlation Between GM and CI Galaxy

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

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

Diversification Opportunities for GM and CI Galaxy

0.6

Correlation Coefficient

GM  CI Galaxy

Poor diversification

The 3 months correlation between GM and CMCX-B is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and CI Galaxy Multi Crypto in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CI Galaxy Multi 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 CI Galaxy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CI Galaxy Multi has no effect on the direction of GM i.e., GM and CI Galaxy go up and down completely randomly.

Pair Corralation between GM and CI Galaxy

Allowing for the 90-day total investment horizon General Motors is expected to under-perform the CI Galaxy. But the stock apears to be less risky and, when comparing its historical volatility, General Motors is 1.07 times less risky than CI Galaxy. The stock trades about -0.11 of its potential returns per unit of risk. The CI Galaxy Multi Crypto is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  1,514  in CI Galaxy Multi Crypto on September 22, 2024 and sell it today you would earn a total of  81.00  from holding CI Galaxy Multi Crypto or generate 5.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

General Motors  vs.  CI Galaxy Multi Crypto

General Motors

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in General Motors are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating primary indicators, GM may actually be approaching a critical reversion point that can send shares even higher in January 2025.

CI Galaxy Multi

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CI Galaxy Multi Crypto are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating fundamental indicators, CI Galaxy sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GM and CI Galaxy

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

The idea behind General Motors and CI Galaxy Multi Crypto 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 Anywhere module to track or share privately all of your investments from the convenience of any device.