Correlation Between GM and Trend Etf

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

Diversification Opportunities for GM and Trend Etf

0.74
  Correlation Coefficient

Poor diversification

The 3 months correlation between GM and Trend is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Trend Etf Msci in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trend Etf Msci 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 Trend Etf. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trend Etf Msci has no effect on the direction of GM i.e., GM and Trend Etf go up and down completely randomly.

Pair Corralation between GM and Trend Etf

Allowing for the 90-day total investment horizon GM is expected to generate 1.38 times less return on investment than Trend Etf. In addition to that, GM is 2.6 times more volatile than Trend Etf Msci. It trades about 0.06 of its total potential returns per unit of risk. Trend Etf Msci is currently generating about 0.2 per unit of volatility. If you would invest  1,251  in Trend Etf Msci on September 12, 2024 and sell it today you would earn a total of  300.00  from holding Trend Etf Msci or generate 23.98% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy98.43%
ValuesDaily Returns

General Motors  vs.  Trend Etf Msci

 Performance 
       Timeline  
General Motors 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in General Motors are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating primary indicators, GM displayed solid returns over the last few months and may actually be approaching a breakup point.
Trend Etf Msci 

Risk-Adjusted Performance

22 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Trend Etf Msci are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Trend Etf sustained solid returns over the last few months and may actually be approaching a breakup point.

GM and Trend Etf Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with GM and Trend Etf

The main advantage of trading using opposite GM and Trend Etf positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Trend Etf 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 Trend Etf will offset losses from the drop in Trend Etf's long position.
The idea behind General Motors and Trend Etf Msci 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.
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.

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