Correlation Between GM and Rubicon Technology

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

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

Diversification Opportunities for GM and Rubicon Technology

0.05

Correlation Coefficient

GM  Rubicon Technology

Significant diversification

The 3 months correlation between GM and Rubicon is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Rubicon Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rubicon Technology 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 Rubicon Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rubicon Technology has no effect on the direction of GM i.e., GM and Rubicon Technology go up and down completely randomly.

Pair Corralation between GM and Rubicon Technology

If you would invest  157.00  in Rubicon Technology on September 21, 2024 and sell it today you would earn a total of  0.00  from holding Rubicon Technology or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	4.55%
Values	Daily Returns

General Motors  vs.  Rubicon Technology

General Motors

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in General Motors are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very weak primary indicators, GM may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Rubicon Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rubicon Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Rubicon Technology is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with GM and Rubicon Technology

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

The idea behind General Motors and Rubicon Technology 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.