Correlation Between DAIMLER AG and GM

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

Diversification Opportunities for DAIMLER AG and GM

0.57
  Correlation Coefficient

Very weak diversification

The 3 months correlation between DAIMLER and GM is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding DAIMLER AG and General Motors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General Motors and DAIMLER AG 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 DAIMLER AG are associated (or correlated) with GM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of General Motors has no effect on the direction of DAIMLER AG i.e., DAIMLER AG and GM go up and down completely randomly.

Pair Corralation between DAIMLER AG and GM

Assuming the 90 days horizon DAIMLER AG is expected to generate 0.86 times more return on investment than GM. However, DAIMLER AG is 1.17 times less risky than GM. It trades about 0.0 of its potential returns per unit of risk. General Motors is currently generating about -0.04 per unit of risk. If you would invest  6,609  in DAIMLER AG on May 12, 2022 and sell it today you would lose (470.00)  from holding DAIMLER AG or give up 7.11% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

DAIMLER AG  vs.  General Motors

 Performance (%) 
       Timeline  
DAIMLER AG 
DAIMLER Performance
0 of 100
Over the last 90 days DAIMLER AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound forward indicators, DAIMLER AG is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

DAIMLER Price Channel

General Motors 
GM Performance
2 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in General Motors are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively steady primary indicators, GM is not utilizing all of its potentials. The latest stock price chaos, may contribute to medium-term losses for the stakeholders.

GM Price Channel

DAIMLER AG and GM Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with DAIMLER AG and GM

The main advantage of trading using opposite DAIMLER AG and GM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DAIMLER AG position performs unexpectedly, GM 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 GM will offset losses from the drop in GM's long position.
The idea behind DAIMLER AG and General Motors 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.

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