Correlation Between GM and Kardan Israel
Can any of the company-specific risk be diversified away by investing in both GM and Kardan Israel 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 Kardan Israel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Kardan Israel, you can compare the effects of market volatilities on GM and Kardan Israel 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 Kardan Israel. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Kardan Israel.
Diversification Opportunities for GM and Kardan Israel
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between GM and Kardan is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Kardan Israel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kardan Israel 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 Kardan Israel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kardan Israel has no effect on the direction of GM i.e., GM and Kardan Israel go up and down completely randomly.
Pair Corralation between GM and Kardan Israel
Allowing for the 90-day total investment horizon General Motors is expected to generate 1.04 times more return on investment than Kardan Israel. However, GM is 1.04 times more volatile than Kardan Israel. It trades about 0.08 of its potential returns per unit of risk. Kardan Israel is currently generating about 0.03 per unit of risk. If you would invest 4,400 in General Motors on January 26, 2024 and sell it today you would earn a total of 108.00 from holding General Motors or generate 2.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 76.19% |
| Values | Daily Returns |
General Motors vs. Kardan Israel
Performance |
| Timeline |
| General Motors |
| Kardan Israel |
GM and Kardan Israel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Kardan Israel
The main advantage of trading using opposite GM and Kardan Israel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Kardan Israel 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 Kardan Israel will offset losses from the drop in Kardan Israel's long position.The idea behind General Motors and Kardan Israel 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.| Kardan Israel vs. Azrieli Group | Kardan Israel vs. Melisron | Kardan Israel vs. Amot Investments | Kardan Israel vs. Mivne Real Estate |
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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