Correlation Between GM and Rizal Commercial
Can any of the company-specific risk be diversified away by investing in both GM and Rizal Commercial 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 Rizal Commercial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Rizal Commercial Banking, you can compare the effects of market volatilities on GM and Rizal Commercial 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 Rizal Commercial. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Rizal Commercial.
Diversification Opportunities for GM and Rizal Commercial
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GM and Rizal is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Rizal Commercial Banking in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rizal Commercial Banking 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 Rizal Commercial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rizal Commercial Banking has no effect on the direction of GM i.e., GM and Rizal Commercial go up and down completely randomly.
Pair Corralation between GM and Rizal Commercial
Allowing for the 90-day total investment horizon General Motors is expected to under-perform the Rizal Commercial. In addition to that, GM is 1.26 times more volatile than Rizal Commercial Banking. It trades about -0.03 of its total potential returns per unit of risk. Rizal Commercial Banking is currently generating about 0.08 per unit of volatility. If you would invest 2,480 in Rizal Commercial Banking on December 27, 2024 and sell it today you would earn a total of 220.00 from holding Rizal Commercial Banking or generate 8.87% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 96.67% |
Values | Daily Returns |
General Motors vs. Rizal Commercial Banking
Performance |
Timeline |
General Motors |
Rizal Commercial Banking |
GM and Rizal Commercial Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with GM and Rizal Commercial
The main advantage of trading using opposite GM and Rizal Commercial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Rizal Commercial 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 Rizal Commercial will offset losses from the drop in Rizal Commercial's long position.The idea behind General Motors and Rizal Commercial Banking 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.Rizal Commercial vs. Metro Retail Stores | Rizal Commercial vs. Apex Mining Co | Rizal Commercial vs. Figaro Coffee Group | Rizal Commercial vs. Megawide Construction Corp |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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