Correlation Between GM and Marcus

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

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

Diversification Opportunities for GM and Marcus

0.13

Correlation Coefficient

GM  Marcus

Average diversification

The 3 months correlation between GM and Marcus is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Marcus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marcus 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 Marcus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marcus has no effect on the direction of GM i.e., GM and Marcus go up and down completely randomly.

Pair Corralation between GM and Marcus

Allowing for the 90-day total investment horizon General Motors is expected to generate 0.93 times more return on investment than Marcus. However, General Motors is 1.07 times less risky than Marcus. It trades about 0.12 of its potential returns per unit of risk. Marcus is currently generating about -0.05 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.  Marcus

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.

Marcus

Risk-Adjusted Performance

Very Weak

Over the last 90 days Marcus has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with GM and Marcus

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

The idea behind General Motors and Marcus 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.