Correlation Between GM and Atturra

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

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

Diversification Opportunities for GM and Atturra

0.58

Correlation Coefficient

GM  Atturra

Very weak diversification

The 3 months correlation between GM and Atturra is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Atturra in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atturra 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 Atturra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atturra has no effect on the direction of GM i.e., GM and Atturra go up and down completely randomly.

Pair Corralation between GM and Atturra

Allowing for the 90-day total investment horizon GM is expected to generate 1.34 times less return on investment than Atturra. In addition to that, GM is 1.13 times more volatile than Atturra. It trades about 0.08 of its total potential returns per unit of risk. Atturra is currently generating about 0.12 per unit of volatility. If you would invest  90.00  in Atturra on August 30, 2024 and sell it today you would earn a total of  16.00  from holding Atturra or generate 17.78% return on investment over 90 days.

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

General Motors  vs.  Atturra

General Motors

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in General Motors are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very weak primary indicators, GM displayed solid returns over the last few months and may actually be approaching a breakup point.

Atturra

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Atturra are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Atturra unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GM and Atturra

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

The idea behind General Motors and Atturra 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.