Correlation Between GM and Forrester Research

Can any of the company-specific risk be diversified away by investing in both GM and Forrester Research 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 Forrester Research into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between General Motors and Forrester Research, you can compare the effects of market volatilities on GM and Forrester Research 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 Forrester Research. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Forrester Research.

Diversification Opportunities for GM and Forrester Research

0.19

Correlation Coefficient

GM  Forrester Research

Average diversification

The 3 months correlation between GM and Forrester is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Forrester Research in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Forrester Research 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 Forrester Research. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Forrester Research has no effect on the direction of GM i.e., GM and Forrester Research go up and down completely randomly.

Pair Corralation between GM and Forrester Research

Allowing for the 90-day total investment horizon General Motors is expected to generate 0.62 times more return on investment than Forrester Research. However, General Motors is 1.61 times less risky than Forrester Research. It trades about 0.12 of its potential returns per unit of risk. Forrester Research is currently generating about 0.07 per unit of risk. If you would invest  4,524  in General Motors on May 5, 2025 and sell it today you would earn a total of  729.00  from holding General Motors or generate 16.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

General Motors  vs.  Forrester Research

General Motors

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in General Motors are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile primary indicators, GM displayed solid returns over the last few months and may actually be approaching a breakup point.

Forrester Research

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Forrester Research are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent basic indicators, Forrester Research reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GM and Forrester Research

The main advantage of trading using opposite GM and Forrester Research positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Forrester Research 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 Forrester Research will offset losses from the drop in Forrester Research's long position.

The idea behind General Motors and Forrester Research 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.

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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.