Correlation Between GODM Investments and Nissan

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

By analyzing existing cross correlation between GODM Investments and Nissan, you can compare the effects of market volatilities on GODM Investments and Nissan 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 GODM Investments with a short position of Nissan. Check out your portfolio center. Please also check ongoing floating volatility patterns of GODM Investments and Nissan.

Diversification Opportunities for GODM Investments and Nissan

-0.38

Correlation Coefficient

GODM Investments  Nissan

Very good diversification

The 3 months correlation between GODM and Nissan is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding GODM Investments and Nissan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nissan and GODM Investments 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 GODM Investments are associated (or correlated) with Nissan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nissan has no effect on the direction of GODM Investments i.e., GODM Investments and Nissan go up and down completely randomly.

Pair Corralation between GODM Investments and Nissan

Assuming the 90 days trading horizon GODM Investments is expected to under-perform the Nissan. In addition to that, GODM Investments is 1.19 times more volatile than Nissan. It trades about -0.07 of its total potential returns per unit of risk. Nissan is currently generating about 0.0 per unit of volatility. If you would invest  131,191  in Nissan on September 24, 2024 and sell it today you would lose (1,991) from holding Nissan or give up 1.52% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	97.87%
Values	Daily Returns

GODM Investments  vs.  Nissan

GODM Investments

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GODM Investments has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Nissan

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nissan has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Nissan is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with GODM Investments and Nissan

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

The idea behind GODM Investments and Nissan 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.