Correlation Between General American and Schroders PLC
Can any of the company-specific risk be diversified away by investing in both General American and Schroders PLC 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 General American and Schroders PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General American Investors and Schroders PLC, you can compare the effects of market volatilities on General American and Schroders PLC 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 General American with a short position of Schroders PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of General American and Schroders PLC.
Diversification Opportunities for General American and Schroders PLC
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between General and Schroders is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding General American Investors and Schroders PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schroders PLC and General American 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 American Investors are associated (or correlated) with Schroders PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schroders PLC has no effect on the direction of General American i.e., General American and Schroders PLC go up and down completely randomly.
Pair Corralation between General American and Schroders PLC
Considering the 90-day investment horizon General American Investors is expected to under-perform the Schroders PLC. But the stock apears to be less risky and, when comparing its historical volatility, General American Investors is 4.11 times less risky than Schroders PLC. The stock trades about -0.34 of its potential returns per unit of risk. The Schroders PLC is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 409.00 in Schroders PLC on December 1, 2024 and sell it today you would earn a total of 26.00 from holding Schroders PLC or generate 6.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
General American Investors vs. Schroders PLC
Performance |
| Timeline |
| General American Inv |
| Schroders PLC |
General American and Schroders PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with General American and Schroders PLC
The main advantage of trading using opposite General American and Schroders PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if General American position performs unexpectedly, Schroders PLC 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 Schroders PLC will offset losses from the drop in Schroders PLC's long position.| General American vs. Blackrock Muniyield | General American vs. Allianzgi Equity Convertible | General American vs. MFS Investment Grade | General American vs. Eaton Vance National |
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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 the Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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