Correlation Between GM and Atlassian Cls

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

Diversification Opportunities for GM and Atlassian Cls

0.26
  Correlation Coefficient

Modest diversification

The 3 months correlation between GM and Atlassian is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Atlassian Cls A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atlassian Cls A 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 Atlassian Cls. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atlassian Cls A has no effect on the direction of GM i.e., GM and Atlassian Cls go up and down completely randomly.

Pair Corralation between GM and Atlassian Cls

Allowing for the 90-day total investment horizon GM is expected to generate 3.0 times less return on investment than Atlassian Cls. But when comparing it to its historical volatility, General Motors is 1.63 times less risky than Atlassian Cls. It trades about 0.15 of its potential returns per unit of risk. Atlassian Cls A is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest  16,768  in Atlassian Cls A on May 15, 2022 and sell it today you would earn a total of  11,557  from holding Atlassian Cls A or generate 68.92% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

General Motors  vs.  Atlassian Cls A

 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 sluggish primary indicators, GM may actually be approaching a critical reversion point that can send shares even higher in September 2022.

GM Price Channel

Atlassian Cls A 
Atlassian Performance
13 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Atlassian Cls A are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively sluggish basic indicators, Atlassian Cls revealed solid returns over the last few months and may actually be approaching a breakup point.

Atlassian Price Channel

GM and Atlassian Cls Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with GM and Atlassian Cls

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

Atlassian Cls A

Pair trading matchups for Atlassian Cls

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 Global Correlations module to find global opportunities by holding instruments from different markets.

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