Correlation Between GM and PHENIXFIN

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

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

Diversification Opportunities for GM and PHENIXFIN

-0.57

Correlation Coefficient

GM  PHENIXFIN

Excellent diversification

The 3 months correlation between GM and PHENIXFIN is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and PHENIXFIN P DL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PHENIXFIN P DL 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 PHENIXFIN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PHENIXFIN P DL has no effect on the direction of GM i.e., GM and PHENIXFIN go up and down completely randomly.

Pair Corralation between GM and PHENIXFIN

Allowing for the 90-day total investment horizon General Motors is expected to under-perform the PHENIXFIN. In addition to that, GM is 1.63 times more volatile than PHENIXFIN P DL. It trades about -0.01 of its total potential returns per unit of risk. PHENIXFIN P DL is currently generating about 0.07 per unit of volatility. If you would invest  4,522  in PHENIXFIN P DL on December 20, 2024 and sell it today you would earn a total of  278.00  from holding PHENIXFIN P DL or generate 6.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.33%
Values	Daily Returns

General Motors  vs.  PHENIXFIN P DL

General Motors

Risk-Adjusted Performance

Very Weak

Over the last 90 days General Motors has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

PHENIXFIN P DL

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PHENIXFIN P DL are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, PHENIXFIN may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with GM and PHENIXFIN

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

The idea behind General Motors and PHENIXFIN P DL 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.