Correlation Between GM and Hexcel Corp

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both GM and Hexcel Corp 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 Hexcel Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Hexcel Corp, you can compare the effects of market volatilities on GM and Hexcel Corp 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 Hexcel Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Hexcel Corp.

Diversification Opportunities for GM and Hexcel Corp

0.73
  Correlation Coefficient

Poor diversification

The 3 months correlation between GM and Hexcel is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Hexcel Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hexcel Corp 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 Hexcel Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hexcel Corp has no effect on the direction of GM i.e., GM and Hexcel Corp go up and down completely randomly.

Pair Corralation between GM and Hexcel Corp

Allowing for the 90-day total investment horizon GM is expected to generate 7.33 times less return on investment than Hexcel Corp. In addition to that, GM is 1.03 times more volatile than Hexcel Corp. It trades about 0.0 of its total potential returns per unit of risk. Hexcel Corp is currently generating about 0.04 per unit of volatility. If you would invest  4,071  in Hexcel Corp on July 1, 2022 and sell it today you would earn a total of  1,305  from holding Hexcel Corp or generate 32.06% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

General Motors  vs.  Hexcel Corp

 Performance (%) 
       Timeline  
General Motors 
GM Performance
5 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in General Motors are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting primary indicators, GM may actually be approaching a critical reversion point that can send shares even higher in October 2022.

GM Price Channel

Hexcel Corp 
Hexcel Performance
1 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Hexcel Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively steady basic indicators, Hexcel Corp is not utilizing all of its potentials. The latest stock price chaos, may contribute to medium-term losses for the stakeholders.

Hexcel Price Channel

GM and Hexcel Corp Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with GM and Hexcel Corp

The main advantage of trading using opposite GM and Hexcel Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Hexcel Corp 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 Hexcel Corp will offset losses from the drop in Hexcel Corp's long position.
GM vs. Amazon Inc
The idea behind General Motors and Hexcel Corp 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.
Hexcel Corp vs. Amazon Inc
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 Transaction History module to view history of all your transactions and understand their impact on performance.

Other Complementary Tools

Portfolio Suggestion
Get suggestions outside of your existing asset allocation including your own model portfolios
Go
Equity Search
Search for actively traded equities including funds and ETFs from over 30 global markets
Go
Stock Tickers
Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites
Go
Focused Opportunities
Build portfolios using our predefined set of ideas and optimize them against your investing preferences
Go
Aroon Oscillator
Analyze current equity momentum using Aroon Oscillator and other momentum ratios
Go
Financial Widgets
Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets
Go
Equity Valuation
Check real value of public entities based on technical and fundamental data
Go
Equity Forecasting
Use basic forecasting models to generate price predictions and determine price momentum
Go
Portfolio Rebalancing
Analyze risk-adjusted returns against different time horizons to find asset-allocation targets
Go
Portfolio Volatility
Check portfolio volatility and analyze historical return density to properly model market risk
Go
Balance Of Power
Check stock momentum by analyzing Balance Of Power indicator and other technical ratios
Go
Options Analysis
Analyze and evaluate options and option chains as a potential hedge for your portfolios
Go