Correlation Between GM and WANDERER WERKE
Can any of the company-specific risk be diversified away by investing in both GM and WANDERER WERKE 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 WANDERER WERKE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and WANDERER WERKE, you can compare the effects of market volatilities on GM and WANDERER WERKE 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 WANDERER WERKE. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and WANDERER WERKE.
Diversification Opportunities for GM and WANDERER WERKE
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GM and WANDERER is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and WANDERER WERKE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WANDERER WERKE 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 WANDERER WERKE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WANDERER WERKE has no effect on the direction of GM i.e., GM and WANDERER WERKE go up and down completely randomly.
Pair Corralation between GM and WANDERER WERKE
If you would invest 4,796 in General Motors on September 24, 2024 and sell it today you would earn a total of 385.00 from holding General Motors or generate 8.03% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Flat |
Strength | Insignificant |
Accuracy | 0.0% |
Values | Daily Returns |
General Motors vs. WANDERER WERKE
Performance |
Timeline |
General Motors |
WANDERER WERKE |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
GM and WANDERER WERKE Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with GM and WANDERER WERKE
The main advantage of trading using opposite GM and WANDERER WERKE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, WANDERER WERKE 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 WANDERER WERKE will offset losses from the drop in WANDERER WERKE's long position.The idea behind General Motors and WANDERER WERKE 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.WANDERER WERKE vs. National Retail Properties | ||
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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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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