Correlation Between GM and MONITRONICS INTERNATIONAL

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

Diversification Opportunities for GM and MONITRONICS INTERNATIONAL

0.24
  Correlation Coefficient

Modest diversification

The 3 months correlation between GM and MONITRONICS is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and MONITRONICS INTERNATIONAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MONITRONICS INTERNATIONAL 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 MONITRONICS INTERNATIONAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MONITRONICS INTERNATIONAL has no effect on the direction of GM i.e., GM and MONITRONICS INTERNATIONAL go up and down completely randomly.

Pair Corralation between GM and MONITRONICS INTERNATIONAL

Allowing for the 90-day total investment horizon GM is expected to generate 7.05 times less return on investment than MONITRONICS INTERNATIONAL. But when comparing it to its historical volatility, General Motors is 4.45 times less risky than MONITRONICS INTERNATIONAL. It trades about 0.02 of its potential returns per unit of risk. MONITRONICS INTERNATIONAL is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  327.00  in MONITRONICS INTERNATIONAL on July 6, 2022 and sell it today you would lose (302.00)  from holding MONITRONICS INTERNATIONAL or give up 92.35% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

General Motors  vs.  MONITRONICS INTERNATIONAL

 Performance (%) 
       Timeline  
General Motors 
GM Performance
3 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in General Motors are ranked lower than 3 (%) 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 November 2022.

GM Price Channel

MONITRONICS INTERNATIONAL 
MONITRONICS Performance
0 of 100
Over the last 90 days MONITRONICS INTERNATIONAL has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in November 2022. The current disturbance may also be a sign of long term up-swing for the company investors.

MONITRONICS Price Channel

GM and MONITRONICS INTERNATIONAL Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with GM and MONITRONICS INTERNATIONAL

The main advantage of trading using opposite GM and MONITRONICS INTERNATIONAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, MONITRONICS INTERNATIONAL 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 MONITRONICS INTERNATIONAL will offset losses from the drop in MONITRONICS INTERNATIONAL's long position.
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The idea behind General Motors and MONITRONICS INTERNATIONAL 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.
MONITRONICS INTERNATIONAL vs. Microsoft Corp
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.

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