Correlation Between GM and ANZNZ

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

By analyzing existing cross correlation between General Motors and ANZNZ 2166 18 FEB 25, you can compare the effects of market volatilities on GM and ANZNZ 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 ANZNZ. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and ANZNZ.

Diversification Opportunities for GM and ANZNZ

0.51

Correlation Coefficient

GM  ANZNZ

Very weak diversification

The 3 months correlation between GM and ANZNZ is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and ANZNZ 2166 18 FEB 25 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ANZNZ 2166 18 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 ANZNZ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ANZNZ 2166 18 has no effect on the direction of GM i.e., GM and ANZNZ go up and down completely randomly.

Pair Corralation between GM and ANZNZ

Allowing for the 90-day total investment horizon General Motors is expected to generate 0.58 times more return on investment than ANZNZ. However, General Motors is 1.72 times less risky than ANZNZ. It trades about -0.07 of its potential returns per unit of risk. ANZNZ 2166 18 FEB 25 is currently generating about -0.43 per unit of risk. If you would invest  5,547  in General Motors on September 29, 2024 and sell it today you would lose (119.00) from holding General Motors or give up 2.15% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	25.0%
Values	Daily Returns

General Motors  vs.  ANZNZ 2166 18 FEB 25

General Motors

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in General Motors are ranked lower than 11 (%) 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.

ANZNZ 2166 18

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ANZNZ 2166 18 FEB 25 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Bond's basic indicators remain somewhat 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 ANZNZ 2166 18 FEB 25 investors.

Pair Trading with GM and ANZNZ

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

The idea behind General Motors and ANZNZ 2166 18 FEB 25 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.