Correlation Between GM and Triton International

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

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

Diversification Opportunities for GM and Triton International

0.64

Correlation Coefficient

GM  Triton International

Poor diversification

The 3 months correlation between GM and Triton is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Triton International Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Triton International 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 Triton International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Triton International has no effect on the direction of GM i.e., GM and Triton International go up and down completely randomly.

Pair Corralation between GM and Triton International

Allowing for the 90-day total investment horizon General Motors is expected to under-perform the Triton International. In addition to that, GM is 3.69 times more volatile than Triton International Limited. It trades about -0.1 of its total potential returns per unit of risk. Triton International Limited is currently generating about 0.04 per unit of volatility. If you would invest  1,961  in Triton International Limited on December 4, 2024 and sell it today you would earn a total of  8.00  from holding Triton International Limited or generate 0.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.24%
Values	Daily Returns

General Motors  vs.  Triton International Limited

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 latest weak performance, the Stock's primary indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Triton International

Risk-Adjusted Performance

Very Weak

Over the last 90 days Triton International Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Preferred Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with GM and Triton International

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

The idea behind General Motors and Triton International Limited 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.