Correlation Between GM and SYSCO

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

By analyzing existing cross correlation between General Motors and SYSCO P 5375, you can compare the effects of market volatilities on GM and SYSCO 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 SYSCO. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and SYSCO.

Diversification Opportunities for GM and SYSCO

0.16

Correlation Coefficient

GM  SYSCO

Average diversification

The 3 months correlation between GM and SYSCO is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and SYSCO P 5375 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SYSCO P 5375 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 SYSCO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SYSCO P 5375 has no effect on the direction of GM i.e., GM and SYSCO go up and down completely randomly.

Pair Corralation between GM and SYSCO

Allowing for the 90-day total investment horizon General Motors is expected to under-perform the SYSCO. In addition to that, GM is 4.0 times more volatile than SYSCO P 5375. It trades about -0.01 of its total potential returns per unit of risk. SYSCO P 5375 is currently generating about 0.18 per unit of volatility. If you would invest  10,040  in SYSCO P 5375 on December 2, 2024 and sell it today you would earn a total of  150.00  from holding SYSCO P 5375 or generate 1.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	90.48%
Values	Daily Returns

General Motors  vs.  SYSCO P 5375

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.

SYSCO P 5375

Risk-Adjusted Performance

Very Weak

Over the last 90 days SYSCO P 5375 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, SYSCO 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 SYSCO

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

The idea behind General Motors and SYSCO P 5375 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.