Correlation Between GM and Airtificial Intelligence

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

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

Diversification Opportunities for GM and Airtificial Intelligence

-0.64

Correlation Coefficient

GM  Airtificial Intelligence

Excellent diversification

The 3 months correlation between GM and Airtificial is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Airtificial Intelligence Struc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Airtificial Intelligence 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 Airtificial Intelligence. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Airtificial Intelligence has no effect on the direction of GM i.e., GM and Airtificial Intelligence go up and down completely randomly.

Pair Corralation between GM and Airtificial Intelligence

Allowing for the 90-day total investment horizon General Motors is expected to generate 0.85 times more return on investment than Airtificial Intelligence. However, General Motors is 1.17 times less risky than Airtificial Intelligence. It trades about 0.1 of its potential returns per unit of risk. Airtificial Intelligence Structures is currently generating about -0.14 per unit of risk. If you would invest  4,602  in General Motors on September 12, 2024 and sell it today you would earn a total of  672.00  from holding General Motors or generate 14.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

General Motors  vs.  Airtificial Intelligence Struc

General Motors

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in General Motors are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating primary indicators, GM displayed solid returns over the last few months and may actually be approaching a breakup point.

Airtificial Intelligence

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Airtificial Intelligence Structures has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's primary indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with GM and Airtificial Intelligence

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

The idea behind General Motors and Airtificial Intelligence Structures 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.