Correlation Between GM and Computer Task
Can any of the company-specific risk be diversified away by investing in both GM and Computer Task 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 Computer Task into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Computer Task Group, you can compare the effects of market volatilities on GM and Computer Task 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 Computer Task. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Computer Task.
Diversification Opportunities for GM and Computer Task
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GM and Computer is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Computer Task Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Computer Task Group 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 Computer Task. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Computer Task Group has no effect on the direction of GM i.e., GM and Computer Task go up and down completely randomly.
Pair Corralation between GM and Computer Task
If you would invest 3,460 in General Motors on January 24, 2024 and sell it today you would earn a total of 861.00 from holding General Motors or generate 24.88% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 1.61% |
Values | Daily Returns |
General Motors vs. Computer Task Group
Performance |
Timeline |
General Motors |
Computer Task Group |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
GM and Computer Task Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with GM and Computer Task
The main advantage of trading using opposite GM and Computer Task positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Computer Task 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 Computer Task will offset losses from the drop in Computer Task's long position.The idea behind General Motors and Computer Task Group 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.Computer Task vs. The Hackett Group | Computer Task vs. CSP Inc | Computer Task vs. Clarivate Plc | Computer Task vs. Nayax |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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