Correlation Between GM and Sparinvest Japan
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By analyzing existing cross correlation between General Motors and Sparinvest Japan Growth, you can compare the effects of market volatilities on GM and Sparinvest Japan 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 Sparinvest Japan. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Sparinvest Japan.
Diversification Opportunities for GM and Sparinvest Japan
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between GM and Sparinvest is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Sparinvest Japan Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sparinvest Japan Growth 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 Sparinvest Japan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sparinvest Japan Growth has no effect on the direction of GM i.e., GM and Sparinvest Japan go up and down completely randomly.
Pair Corralation between GM and Sparinvest Japan
Allowing for the 90-day total investment horizon General Motors is expected to generate 1.8 times more return on investment than Sparinvest Japan. However, GM is 1.8 times more volatile than Sparinvest Japan Growth. It trades about 0.11 of its potential returns per unit of risk. Sparinvest Japan Growth is currently generating about -0.25 per unit of risk. If you would invest 4,355 in General Motors on January 25, 2024 and sell it today you would earn a total of 153.00 from holding General Motors or generate 3.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 90.91% |
| Values | Daily Returns |
General Motors vs. Sparinvest Japan Growth
Performance |
| Timeline |
| General Motors |
| Sparinvest Japan Growth |
GM and Sparinvest Japan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Sparinvest Japan
The main advantage of trading using opposite GM and Sparinvest Japan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Sparinvest Japan 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 Sparinvest Japan will offset losses from the drop in Sparinvest Japan's long position.The idea behind General Motors and Sparinvest Japan Growth 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.| Sparinvest Japan vs. Jyske Invest Nye | Sparinvest Japan vs. Jyske Invest Nye | Sparinvest Japan vs. Jyske Invest Hjt | Sparinvest Japan vs. Jyske Invest Lange |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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