Correlation Between GM and Amot Investments
Can any of the company-specific risk be diversified away by investing in both GM and Amot Investments 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 Amot Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Amot Investments, you can compare the effects of market volatilities on GM and Amot Investments 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 Amot Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Amot Investments.
Diversification Opportunities for GM and Amot Investments
-0.79 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GM and Amot is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Amot Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amot Investments 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 Amot Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amot Investments has no effect on the direction of GM i.e., GM and Amot Investments go up and down completely randomly.
Pair Corralation between GM and Amot Investments
Allowing for the 90-day total investment horizon General Motors is expected to generate 0.94 times more return on investment than Amot Investments. However, General Motors is 1.06 times less risky than Amot Investments. It trades about 0.04 of its potential returns per unit of risk. Amot Investments is currently generating about -0.04 per unit of risk. If you would invest 3,787 in General Motors on January 24, 2024 and sell it today you would earn a total of 534.00 from holding General Motors or generate 14.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 81.07% |
| Values | Daily Returns |
General Motors vs. Amot Investments
Performance |
| Timeline |
| General Motors |
| Amot Investments |
GM and Amot Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Amot Investments
The main advantage of trading using opposite GM and Amot Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Amot Investments 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 Amot Investments will offset losses from the drop in Amot Investments' long position.The idea behind General Motors and Amot Investments 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.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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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