Correlation Between GM and Gratitude Infinite

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

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

Diversification Opportunities for GM and Gratitude Infinite

0.14

Correlation Coefficient

GM  Gratitude Infinite

Average diversification

The 3 months correlation between GM and Gratitude is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Gratitude Infinite Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gratitude Infinite Public 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 Gratitude Infinite. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gratitude Infinite Public has no effect on the direction of GM i.e., GM and Gratitude Infinite go up and down completely randomly.

Pair Corralation between GM and Gratitude Infinite

Allowing for the 90-day total investment horizon General Motors is expected to generate 3.8 times more return on investment than Gratitude Infinite. However, GM is 3.8 times more volatile than Gratitude Infinite Public. It trades about 0.04 of its potential returns per unit of risk. Gratitude Infinite Public is currently generating about 0.0 per unit of risk. If you would invest  5,034  in General Motors on October 20, 2024 and sell it today you would earn a total of  63.00  from holding General Motors or generate 1.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	20.0%
Values	Daily Returns

General Motors  vs.  Gratitude Infinite Public

General Motors

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in General Motors are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. 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.

Gratitude Infinite Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gratitude Infinite Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with GM and Gratitude Infinite

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

The idea behind General Motors and Gratitude Infinite Public 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.