Correlation Between GM and NBCUNIVERSAL

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

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

Diversification Opportunities for GM and NBCUNIVERSAL

0.2

Correlation Coefficient

GM  NBCUNIVERSAL

Modest diversification

The 3 months correlation between GM and NBCUNIVERSAL is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and NBCUNIVERSAL MEDIA LLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NBCUNIVERSAL MEDIA LLC 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 NBCUNIVERSAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NBCUNIVERSAL MEDIA LLC has no effect on the direction of GM i.e., GM and NBCUNIVERSAL go up and down completely randomly.

Pair Corralation between GM and NBCUNIVERSAL

Allowing for the 90-day total investment horizon General Motors is expected to generate 1.44 times more return on investment than NBCUNIVERSAL. However, GM is 1.44 times more volatile than NBCUNIVERSAL MEDIA LLC. It trades about 0.06 of its potential returns per unit of risk. NBCUNIVERSAL MEDIA LLC is currently generating about -0.09 per unit of risk. If you would invest  4,793  in General Motors on September 21, 2024 and sell it today you would earn a total of  388.00  from holding General Motors or generate 8.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	45.31%
Values	Daily Returns

General Motors  vs.  NBCUNIVERSAL MEDIA LLC

General Motors

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in General Motors are ranked lower than 4 (%) 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.

NBCUNIVERSAL MEDIA LLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NBCUNIVERSAL MEDIA LLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest abnormal 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 NBCUNIVERSAL MEDIA LLC investors.

Pair Trading with GM and NBCUNIVERSAL

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

The idea behind General Motors and NBCUNIVERSAL MEDIA LLC 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 CEOs Directory module to screen CEOs from public companies around the world.