Correlation Between GM and 65339KCA6

Can any of the company-specific risk be diversified away by investing in both GM and 65339KCA6 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 65339KCA6 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between General Motors and NEE 3 15 JAN 52, you can compare the effects of market volatilities on GM and 65339KCA6 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 65339KCA6. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and 65339KCA6.

Diversification Opportunities for GM and 65339KCA6

-0.13

Correlation Coefficient

GM  65339KCA6

Good diversification

The 3 months correlation between GM and 65339KCA6 is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and NEE 3 15 JAN 52 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 65339KCA6 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 65339KCA6. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 65339KCA6 has no effect on the direction of GM i.e., GM and 65339KCA6 go up and down completely randomly.

Pair Corralation between GM and 65339KCA6

Allowing for the 90-day total investment horizon General Motors is expected to under-perform the 65339KCA6. In addition to that, GM is 1.77 times more volatile than NEE 3 15 JAN 52. It trades about -0.03 of its total potential returns per unit of risk. NEE 3 15 JAN 52 is currently generating about 0.03 per unit of volatility. If you would invest  6,513  in NEE 3 15 JAN 52 on October 22, 2024 and sell it today you would earn a total of  103.00  from holding NEE 3 15 JAN 52 or generate 1.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	83.87%
Values	Daily Returns

General Motors  vs.  NEE 3 15 JAN 52

General Motors

Risk-Adjusted Performance

0 of 100

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 very healthy primary indicators, GM is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

65339KCA6

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in NEE 3 15 JAN 52 are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, 65339KCA6 is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with GM and 65339KCA6

The main advantage of trading using opposite GM and 65339KCA6 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, 65339KCA6 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 65339KCA6 will offset losses from the drop in 65339KCA6's long position.

The idea behind General Motors and NEE 3 15 JAN 52 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.

Check out your portfolio center.

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.