Correlation Between GM and Fenix Outdoor

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

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

Diversification Opportunities for GM and Fenix Outdoor

-0.63

Correlation Coefficient

GM  Fenix Outdoor

Excellent diversification

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

Pair Corralation between GM and Fenix Outdoor

Allowing for the 90-day total investment horizon General Motors is expected to generate 1.09 times more return on investment than Fenix Outdoor. However, GM is 1.09 times more volatile than Fenix Outdoor International. It trades about 0.05 of its potential returns per unit of risk. Fenix Outdoor International is currently generating about -0.02 per unit of risk. If you would invest  3,778  in General Motors on September 1, 2024 and sell it today you would earn a total of  1,781  from holding General Motors or generate 47.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.2%
Values	Daily Returns

General Motors  vs.  Fenix Outdoor International

General Motors

Risk-Adjusted Performance

7 of 100

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.

Fenix Outdoor Intern

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fenix Outdoor International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Fenix Outdoor is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with GM and Fenix Outdoor

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

The idea behind General Motors and Fenix Outdoor International 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 Commodity Directory module to find actively traded commodities issued by global exchanges.