Correlation Between GM and Navistar International
Can any of the company-specific risk be diversified away by investing in both GM and Navistar International 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 Navistar International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Navistar International, you can compare the effects of market volatilities on GM and Navistar International 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 Navistar International. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Navistar International.
Diversification Opportunities for GM and Navistar International
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GM and Navistar is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Navistar International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Navistar International 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 Navistar International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Navistar International has no effect on the direction of GM i.e., GM and Navistar International go up and down completely randomly.
Pair Corralation between GM and Navistar International
If you would invest (100.00) in Navistar International on February 3, 2024 and sell it today you would earn a total of 100.00 from holding Navistar International or generate -100.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
General Motors vs. Navistar International
Performance |
| Timeline |
| General Motors |
| Navistar International |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
GM and Navistar International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Navistar International
The main advantage of trading using opposite GM and Navistar International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Navistar International 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 Navistar International will offset losses from the drop in Navistar International's long position.The idea behind General Motors and Navistar International 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.| Navistar International vs. Freedom Bank of | Navistar International vs. Infosys Ltd ADR | Navistar International vs. Arrow Financial | Navistar International vs. Pinterest |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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