Correlation Between GM and Remitly Global

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

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

Diversification Opportunities for GM and Remitly Global

0.89

Correlation Coefficient

GM  Remitly Global

Very poor diversification

The 3 months correlation between GM and Remitly is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Remitly Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Remitly Global 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 Remitly Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Remitly Global has no effect on the direction of GM i.e., GM and Remitly Global go up and down completely randomly.

Pair Corralation between GM and Remitly Global

Allowing for the 90-day total investment horizon GM is expected to generate 3.05 times less return on investment than Remitly Global. But when comparing it to its historical volatility, General Motors is 1.14 times less risky than Remitly Global. It trades about 0.09 of its potential returns per unit of risk. Remitly Global is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  1,344  in Remitly Global on September 3, 2024 and sell it today you would earn a total of  731.00  from holding Remitly Global or generate 54.39% return on investment over 90 days.

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

General Motors  vs.  Remitly Global

General Motors

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in General Motors are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very weak primary indicators, GM displayed solid returns over the last few months and may actually be approaching a breakup point.

Remitly Global

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Remitly Global are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal essential indicators, Remitly Global showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GM and Remitly Global

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

The idea behind General Motors and Remitly Global 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.