Correlation Between Amedisys and GM
Can any of the company-specific risk be diversified away by investing in both Amedisys and GM 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 Amedisys and GM into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amedisys and General Motors, you can compare the effects of market volatilities on Amedisys and GM 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 Amedisys with a short position of GM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amedisys and GM.
Diversification Opportunities for Amedisys and GM
Pay attention - limited upside
The 3 months correlation between Amedisys and GM is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Amedisys and General Motors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General Motors and Amedisys 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 Amedisys are associated (or correlated) with GM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of General Motors has no effect on the direction of Amedisys i.e., Amedisys and GM go up and down completely randomly.
Pair Corralation between Amedisys and GM
Given the investment horizon of 90 days Amedisys is expected to generate 1.77 times less return on investment than GM. But when comparing it to its historical volatility, Amedisys is 1.44 times less risky than GM. It trades about 0.06 of its potential returns per unit of risk. General Motors is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 3,186 in General Motors on January 21, 2024 and sell it today you would earn a total of 1,051 from holding General Motors or generate 32.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Amedisys vs. General Motors
Performance |
| Timeline |
| Amedisys |
| General Motors |
Amedisys and GM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amedisys and GM
The main advantage of trading using opposite Amedisys and GM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amedisys position performs unexpectedly, GM 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 GM will offset losses from the drop in GM's long position.| Amedisys vs. Certara | Amedisys vs. HealthStream | Amedisys vs. Evolent Health | Amedisys vs. Streamline Health Solutions |
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..
Other Complementary Tools
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device |