Correlation Between GM and Glenveagh Properties

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

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

Diversification Opportunities for GM and Glenveagh Properties

0.08

Correlation Coefficient

GM  Glenveagh Properties

Significant diversification

The 3 months correlation between GM and Glenveagh is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Glenveagh Properties PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Glenveagh Properties PLC 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 Glenveagh Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Glenveagh Properties PLC has no effect on the direction of GM i.e., GM and Glenveagh Properties go up and down completely randomly.

Pair Corralation between GM and Glenveagh Properties

Allowing for the 90-day total investment horizon General Motors is expected to generate 2.15 times more return on investment than Glenveagh Properties. However, GM is 2.15 times more volatile than Glenveagh Properties PLC. It trades about 0.09 of its potential returns per unit of risk. Glenveagh Properties PLC is currently generating about 0.1 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  602.00  from holding General Motors or generate 13.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

General Motors  vs.  Glenveagh Properties PLC

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.

Glenveagh Properties PLC

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Glenveagh Properties PLC are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Glenveagh Properties may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with GM and Glenveagh Properties

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

The idea behind General Motors and Glenveagh Properties PLC 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.