Correlation Between GM and 6325C0DZ1

Can any of the company-specific risk be diversified away by investing in both GM and 6325C0DZ1 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 6325C0DZ1 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between General Motors and NAB 1388 12 JAN 25, you can compare the effects of market volatilities on GM and 6325C0DZ1 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 6325C0DZ1. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and 6325C0DZ1.

Diversification Opportunities for GM and 6325C0DZ1

0.39

Correlation Coefficient

GM  6325C0DZ1

Weak diversification

The 3 months correlation between GM and 6325C0DZ1 is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and NAB 1388 12 JAN 25 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NAB 1388 12 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 6325C0DZ1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NAB 1388 12 has no effect on the direction of GM i.e., GM and 6325C0DZ1 go up and down completely randomly.

Pair Corralation between GM and 6325C0DZ1

Allowing for the 90-day total investment horizon General Motors is expected to under-perform the 6325C0DZ1. In addition to that, GM is 3.68 times more volatile than NAB 1388 12 JAN 25. It trades about -0.21 of its total potential returns per unit of risk. NAB 1388 12 JAN 25 is currently generating about -0.4 per unit of volatility. If you would invest  9,955  in NAB 1388 12 JAN 25 on September 25, 2024 and sell it today you would lose (311.00) from holding NAB 1388 12 JAN 25 or give up 3.12% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	57.14%
Values	Daily Returns

General Motors  vs.  NAB 1388 12 JAN 25

General Motors

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in General Motors are ranked lower than 9 (%) 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.

NAB 1388 12

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NAB 1388 12 JAN 25 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, 6325C0DZ1 is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with GM and 6325C0DZ1

The main advantage of trading using opposite GM and 6325C0DZ1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, 6325C0DZ1 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 6325C0DZ1 will offset losses from the drop in 6325C0DZ1's long position.

The idea behind General Motors and NAB 1388 12 JAN 25 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.