Correlation Between GM and Inmobiliaria Colonial
Can any of the company-specific risk be diversified away by investing in both GM and Inmobiliaria Colonial 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 Inmobiliaria Colonial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Inmobiliaria Colonial SA, you can compare the effects of market volatilities on GM and Inmobiliaria Colonial 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 Inmobiliaria Colonial. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Inmobiliaria Colonial.
Diversification Opportunities for GM and Inmobiliaria Colonial
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between GM and Inmobiliaria is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Inmobiliaria Colonial SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inmobiliaria Colonial 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 Inmobiliaria Colonial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inmobiliaria Colonial has no effect on the direction of GM i.e., GM and Inmobiliaria Colonial go up and down completely randomly.
Pair Corralation between GM and Inmobiliaria Colonial
Allowing for the 90-day total investment horizon GM is expected to generate 2.88 times less return on investment than Inmobiliaria Colonial. In addition to that, GM is 1.09 times more volatile than Inmobiliaria Colonial SA. It trades about 0.06 of its total potential returns per unit of risk. Inmobiliaria Colonial SA is currently generating about 0.18 per unit of volatility. If you would invest 537.00 in Inmobiliaria Colonial SA on February 7, 2024 and sell it today you would earn a total of 28.00 from holding Inmobiliaria Colonial SA or generate 5.21% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
General Motors vs. Inmobiliaria Colonial SA
Performance |
Timeline |
General Motors |
Inmobiliaria Colonial |
GM and Inmobiliaria Colonial Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with GM and Inmobiliaria Colonial
The main advantage of trading using opposite GM and Inmobiliaria Colonial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Inmobiliaria Colonial 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 Inmobiliaria Colonial will offset losses from the drop in Inmobiliaria Colonial's long position.The idea behind General Motors and Inmobiliaria Colonial SA 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.Inmobiliaria Colonial vs. Neinor Homes SLU | Inmobiliaria Colonial vs. Lar Espana Real | Inmobiliaria Colonial vs. Atresmedia Corporacin de |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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