Correlation Between Tenneco Automotive and General American

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Can any of the company-specific risk be diversified away by investing in both Tenneco Automotive and General American 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 Tenneco Automotive and General American into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tenneco Automotive and General American Investors, you can compare the effects of market volatilities on Tenneco Automotive and General American 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 Tenneco Automotive with a short position of General American. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tenneco Automotive and General American.

Diversification Opportunities for Tenneco Automotive and General American

  Correlation Coefficient

Very weak diversification

The 3 months correlation between Tenneco and General is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Tenneco Automotive and General American Investors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General American Inv and Tenneco Automotive 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 Tenneco Automotive are associated (or correlated) with General American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of General American Inv has no effect on the direction of Tenneco Automotive i.e., Tenneco Automotive and General American go up and down completely randomly.

Pair Corralation between Tenneco Automotive and General American

Considering the 90-day investment horizon Tenneco Automotive is expected to generate 4.59 times more return on investment than General American. However, Tenneco Automotive is 4.59 times more volatile than General American Investors. It trades about 0.05 of its potential returns per unit of risk. General American Investors is currently generating about 0.01 per unit of risk. If you would invest  833.00  in Tenneco Automotive on June 26, 2022 and sell it today you would earn a total of  935.00  from holding Tenneco Automotive or generate 112.24% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
ValuesDaily Returns

Tenneco Automotive  vs.  General American Investors

 Performance (%) 
Tenneco Automotive 
Tenneco Performance
2 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Tenneco Automotive are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent technical and fundamental indicators, Tenneco Automotive is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Tenneco Price Channel

General American Inv 
General Performance
0 of 100
Over the last 90 days General American Investors has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong primary indicators, General American is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

General Price Channel

Tenneco Automotive and General American Volatility Contrast

   Predicted Return Density   

Pair Trading with Tenneco Automotive and General American

The main advantage of trading using opposite Tenneco Automotive and General American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tenneco Automotive position performs unexpectedly, General American 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 General American will offset losses from the drop in General American's long position.
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The idea behind Tenneco Automotive and General American Investors 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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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 ETF Directory module to find actively traded Exchange Traded Funds (ETF) from around the world.

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