Correlation Between GM and Fiat Chrysler
Can any of the company-specific risk be diversified away by investing in both GM and Fiat Chrysler 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 Fiat Chrysler into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Fiat Chrysler Automobiles, you can compare the effects of market volatilities on GM and Fiat Chrysler 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 Fiat Chrysler. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Fiat Chrysler.
Diversification Opportunities for GM and Fiat Chrysler
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GM and Fiat is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Fiat Chrysler Automobiles in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fiat Chrysler Automobiles 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 Fiat Chrysler. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fiat Chrysler Automobiles has no effect on the direction of GM i.e., GM and Fiat Chrysler go up and down completely randomly.
Pair Corralation between GM and Fiat Chrysler
If you would invest 3,923 in General Motors on January 25, 2024 and sell it today you would earn a total of 598.00 from holding General Motors or generate 15.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
General Motors vs. Fiat Chrysler Automobiles
Performance |
| Timeline |
| General Motors |
| Fiat Chrysler Automobiles |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
GM and Fiat Chrysler Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Fiat Chrysler
The main advantage of trading using opposite GM and Fiat Chrysler positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Fiat Chrysler 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 Fiat Chrysler will offset losses from the drop in Fiat Chrysler's long position.The idea behind General Motors and Fiat Chrysler Automobiles 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.| Fiat Chrysler vs. Vector Group | Fiat Chrysler vs. Keurig Dr Pepper | Fiat Chrysler vs. nLIGHT Inc | Fiat Chrysler vs. Westrock Coffee |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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