Correlation Between GM and Australian Bond
Can any of the company-specific risk be diversified away by investing in both GM and Australian Bond 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 Australian Bond into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Australian Bond Exchange, you can compare the effects of market volatilities on GM and Australian Bond 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 Australian Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Australian Bond.
Diversification Opportunities for GM and Australian Bond
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between GM and Australian is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Australian Bond Exchange in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Australian Bond Exchange 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 Australian Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Australian Bond Exchange has no effect on the direction of GM i.e., GM and Australian Bond go up and down completely randomly.
Pair Corralation between GM and Australian Bond
Allowing for the 90-day total investment horizon General Motors is expected to generate 0.19 times more return on investment than Australian Bond. However, General Motors is 5.18 times less risky than Australian Bond. It trades about 0.02 of its potential returns per unit of risk. Australian Bond Exchange is currently generating about -0.01 per unit of risk. If you would invest 4,227 in General Motors on November 8, 2024 and sell it today you would earn a total of 554.00 from holding General Motors or generate 13.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.8% |
| Values | Daily Returns |
General Motors vs. Australian Bond Exchange
Performance |
| Timeline |
| General Motors |
| Australian Bond Exchange |
GM and Australian Bond Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Australian Bond
The main advantage of trading using opposite GM and Australian Bond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Australian Bond 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 Australian Bond will offset losses from the drop in Australian Bond's long position.The idea behind General Motors and Australian Bond Exchange 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.| Australian Bond vs. Hotel Property Investments | Australian Bond vs. Dynamic Drill And | Australian Bond vs. Gtn | Australian Bond vs. Nufarm |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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