Correlation Between GM and ShiftPixy

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

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

Diversification Opportunities for GM and ShiftPixy

-0.6

Correlation Coefficient

GM  ShiftPixy

Excellent diversification

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

Pair Corralation between GM and ShiftPixy

Allowing for the 90-day total investment horizon General Motors is expected to generate 0.16 times more return on investment than ShiftPixy. However, General Motors is 6.19 times less risky than ShiftPixy. It trades about 0.08 of its potential returns per unit of risk. ShiftPixy is currently generating about -0.17 per unit of risk. If you would invest  4,741  in General Motors on September 17, 2024 and sell it today you would earn a total of  512.00  from holding General Motors or generate 10.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	46.88%
Values	Daily Returns

General Motors  vs.  ShiftPixy

General Motors

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in General Motors are ranked lower than 6 (%) 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.

ShiftPixy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ShiftPixy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with GM and ShiftPixy

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

The idea behind General Motors and ShiftPixy 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..