Correlation Between GM and COLGATE
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By analyzing existing cross correlation between General Motors and COLGATE PALMOLIVE MEDIUM TERM, you can compare the effects of market volatilities on GM and COLGATE 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 COLGATE. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and COLGATE.
Diversification Opportunities for GM and COLGATE
Pay attention - limited upside
The 3 months correlation between GM and COLGATE is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and COLGATE PALMOLIVE MEDIUM TERM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COLGATE PALMOLIVE 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 COLGATE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COLGATE PALMOLIVE has no effect on the direction of GM i.e., GM and COLGATE go up and down completely randomly.
Pair Corralation between GM and COLGATE
Allowing for the 90-day total investment horizon General Motors is expected to under-perform the COLGATE. In addition to that, GM is 1.15 times more volatile than COLGATE PALMOLIVE MEDIUM TERM. It trades about -0.22 of its total potential returns per unit of risk. COLGATE PALMOLIVE MEDIUM TERM is currently generating about 0.11 per unit of volatility. If you would invest 8,677 in COLGATE PALMOLIVE MEDIUM TERM on September 26, 2024 and sell it today you would earn a total of 335.00 from holding COLGATE PALMOLIVE MEDIUM TERM or generate 3.86% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 90.48% |
Values | Daily Returns |
General Motors vs. COLGATE PALMOLIVE MEDIUM TERM
Performance |
Timeline |
General Motors |
COLGATE PALMOLIVE |
GM and COLGATE Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with GM and COLGATE
The main advantage of trading using opposite GM and COLGATE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, COLGATE 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 COLGATE will offset losses from the drop in COLGATE's long position.The idea behind General Motors and COLGATE PALMOLIVE MEDIUM TERM 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.COLGATE vs. Mangazeya Mining | COLGATE vs. Evolution Mining | COLGATE vs. Everspin Technologies | COLGATE vs. Zijin Mining Group |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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