Correlation Between GM and Intellicheck Mobilisa

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

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

Diversification Opportunities for GM and Intellicheck Mobilisa

0.65

Correlation Coefficient

GM  Intellicheck Mobilisa

Poor diversification

The 3 months correlation between GM and Intellicheck is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Intellicheck Mobilisa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intellicheck Mobilisa 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 Intellicheck Mobilisa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intellicheck Mobilisa has no effect on the direction of GM i.e., GM and Intellicheck Mobilisa go up and down completely randomly.

Pair Corralation between GM and Intellicheck Mobilisa

Allowing for the 90-day total investment horizon General Motors is expected to generate 0.45 times more return on investment than Intellicheck Mobilisa. However, General Motors is 2.21 times less risky than Intellicheck Mobilisa. It trades about 0.06 of its potential returns per unit of risk. Intellicheck Mobilisa is currently generating about 0.01 per unit of risk. If you would invest  4,616  in General Motors on September 21, 2024 and sell it today you would earn a total of  552.50  from holding General Motors or generate 11.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

General Motors  vs.  Intellicheck Mobilisa

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 weak primary indicators, GM may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Intellicheck Mobilisa

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Intellicheck Mobilisa are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental indicators, Intellicheck Mobilisa displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GM and Intellicheck Mobilisa

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

The idea behind General Motors and Intellicheck Mobilisa 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.