Correlation Between GM and MASSMU

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

By analyzing existing cross correlation between General Motors and MASSMU 5672 01 DEC 52, you can compare the effects of market volatilities on GM and MASSMU 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 MASSMU. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and MASSMU.

Diversification Opportunities for GM and MASSMU

0.4

Correlation Coefficient

GM  MASSMU

Very weak diversification

The 3 months correlation between GM and MASSMU is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and MASSMU 5672 01 DEC 52 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MASSMU 5672 01 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 MASSMU. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MASSMU 5672 01 has no effect on the direction of GM i.e., GM and MASSMU go up and down completely randomly.

Pair Corralation between GM and MASSMU

Allowing for the 90-day total investment horizon General Motors is expected to generate 1.65 times more return on investment than MASSMU. However, GM is 1.65 times more volatile than MASSMU 5672 01 DEC 52. It trades about 0.1 of its potential returns per unit of risk. MASSMU 5672 01 DEC 52 is currently generating about 0.03 per unit of risk. If you would invest  4,563  in General Motors on September 25, 2024 and sell it today you would earn a total of  618.00  from holding General Motors or generate 13.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	47.62%
Values	Daily Returns

General Motors  vs.  MASSMU 5672 01 DEC 52

General Motors

Risk-Adjusted Performance

7 of 100

Modest

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 weak primary indicators, GM displayed solid returns over the last few months and may actually be approaching a breakup point.

MASSMU 5672 01

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in MASSMU 5672 01 DEC 52 are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, MASSMU is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with GM and MASSMU

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

The idea behind General Motors and MASSMU 5672 01 DEC 52 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.