Correlation Between GM and Abr Enhanced
Can any of the company-specific risk be diversified away by investing in both GM and Abr Enhanced 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 Abr Enhanced into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Abr Enhanced Short, you can compare the effects of market volatilities on GM and Abr Enhanced 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 Abr Enhanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Abr Enhanced.
Diversification Opportunities for GM and Abr Enhanced
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between GM and Abr is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Abr Enhanced Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Abr Enhanced Short 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 Abr Enhanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Abr Enhanced Short has no effect on the direction of GM i.e., GM and Abr Enhanced go up and down completely randomly.
Pair Corralation between GM and Abr Enhanced
Allowing for the 90-day total investment horizon GM is expected to generate 1.27 times less return on investment than Abr Enhanced. In addition to that, GM is 2.41 times more volatile than Abr Enhanced Short. It trades about 0.16 of its total potential returns per unit of risk. Abr Enhanced Short is currently generating about 0.49 per unit of volatility. If you would invest 751.00 in Abr Enhanced Short on September 2, 2024 and sell it today you would earn a total of 95.00 from holding Abr Enhanced Short or generate 12.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Abr Enhanced Short
Performance |
| Timeline |
| General Motors |
| Abr Enhanced Short |
GM and Abr Enhanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Abr Enhanced
The main advantage of trading using opposite GM and Abr Enhanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Abr Enhanced 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 Abr Enhanced will offset losses from the drop in Abr Enhanced's long position.The idea behind General Motors and Abr Enhanced Short 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.| Abr Enhanced vs. Origin Emerging Markets | Abr Enhanced vs. Angel Oak Multi Strategy | Abr Enhanced vs. Artisan Emerging Markets | Abr Enhanced vs. Pace International Emerging |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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