Correlation Between GM and INTNED

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

By analyzing existing cross correlation between General Motors and INTNED 14 01 JUL 26, you can compare the effects of market volatilities on GM and INTNED 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 INTNED. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and INTNED.

Diversification Opportunities for GM and INTNED

0.37

Correlation Coefficient

GM  INTNED

Weak diversification

The 3 months correlation between GM and INTNED is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and INTNED 14 01 JUL 26 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INTNED 14 01 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 INTNED. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INTNED 14 01 has no effect on the direction of GM i.e., GM and INTNED go up and down completely randomly.

Pair Corralation between GM and INTNED

Allowing for the 90-day total investment horizon General Motors is expected to generate 1.76 times more return on investment than INTNED. However, GM is 1.76 times more volatile than INTNED 14 01 JUL 26. It trades about -0.16 of its potential returns per unit of risk. INTNED 14 01 JUL 26 is currently generating about -0.4 per unit of risk. If you would invest  5,612  in General Motors on September 19, 2024 and sell it today you would lose (497.00) from holding General Motors or give up 8.86% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	57.14%
Values	Daily Returns

General Motors  vs.  INTNED 14 01 JUL 26

General Motors

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in General Motors are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very weak primary indicators, GM may actually be approaching a critical reversion point that can send shares even higher in January 2025.

INTNED 14 01

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days INTNED 14 01 JUL 26 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for INTNED 14 01 JUL 26 investors.

Pair Trading with GM and INTNED

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

The idea behind General Motors and INTNED 14 01 JUL 26 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.