Correlation Between GM and Invernova

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

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

Diversification Opportunities for GM and Invernova

0.0

Correlation Coefficient

GM  Invernova

Pay attention - limited upside

The 3 months correlation between GM and Invernova is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Invernova SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invernova SA 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 Invernova. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invernova SA has no effect on the direction of GM i.e., GM and Invernova go up and down completely randomly.

Pair Corralation between GM and Invernova

If you would invest (100.00) in Invernova SA on September 23, 2024 and sell it today you would earn a total of  100.00  from holding Invernova SA or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

General Motors  vs.  Invernova SA

General Motors

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in General Motors are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating primary indicators, GM may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Invernova SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Invernova SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Invernova is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with GM and Invernova

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

The idea behind General Motors and Invernova 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.

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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.