Correlation Between GM and Fossil
Can any of the company-specific risk be diversified away by investing in both GM and Fossil 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 Fossil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Fossil Group, you can compare the effects of market volatilities on GM and Fossil 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 Fossil. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Fossil.
Diversification Opportunities for GM and Fossil
Pay attention - limited upside
The 3 months correlation between GM and Fossil is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Fossil Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fossil 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 Fossil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fossil Group has no effect on the direction of GM i.e., GM and Fossil go up and down completely randomly.
Pair Corralation between GM and Fossil
Allowing for the 90-day total investment horizon General Motors is expected to generate 0.47 times more return on investment than Fossil. However, General Motors is 2.11 times less risky than Fossil. It trades about 0.02 of its potential returns per unit of risk. Fossil Group is currently generating about -0.08 per unit of risk. If you would invest 3,805 in General Motors on January 18, 2024 and sell it today you would earn a total of 441.00 from holding General Motors or generate 11.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Fossil Group
Performance |
| Timeline |
| General Motors |
| Fossil Group |
GM and Fossil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Fossil
The main advantage of trading using opposite GM and Fossil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Fossil 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 Fossil will offset losses from the drop in Fossil's long position.| GM vs. Hycroft Mining Holding | GM vs. Exela Technologies | GM vs. Aquagold International | GM vs. Thrivent High Yield |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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