Correlation Between GM and Alpha Blue
Can any of the company-specific risk be diversified away by investing in both GM and Alpha Blue 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 Alpha Blue into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Alpha Blue Capital, you can compare the effects of market volatilities on GM and Alpha Blue 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 Alpha Blue. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Alpha Blue.
Diversification Opportunities for GM and Alpha Blue
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between GM and Alpha is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Alpha Blue Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alpha Blue Capital 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 Alpha Blue. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alpha Blue Capital has no effect on the direction of GM i.e., GM and Alpha Blue go up and down completely randomly.
Pair Corralation between GM and Alpha Blue
Allowing for the 90-day total investment horizon General Motors is expected to generate 2.71 times more return on investment than Alpha Blue. However, GM is 2.71 times more volatile than Alpha Blue Capital. It trades about 0.12 of its potential returns per unit of risk. Alpha Blue Capital is currently generating about 0.32 per unit of risk. If you would invest 5,197 in General Motors on August 31, 2024 and sell it today you would earn a total of 353.00 from holding General Motors or generate 6.79% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
General Motors vs. Alpha Blue Capital
Performance |
Timeline |
General Motors |
Alpha Blue Capital |
GM and Alpha Blue Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with GM and Alpha Blue
The main advantage of trading using opposite GM and Alpha Blue positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Alpha Blue 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 Alpha Blue will offset losses from the drop in Alpha Blue's long position.The idea behind General Motors and Alpha Blue Capital 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.Alpha Blue vs. iShares Small Cap | Alpha Blue vs. Invesco ESG NASDAQ | Alpha Blue vs. Invesco ESG NASDAQ | Alpha Blue vs. BlackRock Carbon Transition |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
Other Complementary Tools
Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios |