Correlation Between GM and Alpine High
Can any of the company-specific risk be diversified away by investing in both GM and Alpine High 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 Alpine High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Alpine High Yield, you can compare the effects of market volatilities on GM and Alpine High 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 Alpine High. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Alpine High.
Diversification Opportunities for GM and Alpine High
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between GM and Alpine is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Alpine High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alpine High Yield 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 Alpine High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alpine High Yield has no effect on the direction of GM i.e., GM and Alpine High go up and down completely randomly.
Pair Corralation between GM and Alpine High
Allowing for the 90-day total investment horizon General Motors is expected to generate 11.71 times more return on investment than Alpine High. However, GM is 11.71 times more volatile than Alpine High Yield. It trades about 0.07 of its potential returns per unit of risk. Alpine High Yield is currently generating about 0.09 per unit of risk. If you would invest 3,536 in General Motors on August 31, 2024 and sell it today you would earn a total of 2,023 from holding General Motors or generate 57.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Alpine High Yield
Performance |
| Timeline |
| General Motors |
| Alpine High Yield |
GM and Alpine High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Alpine High
The main advantage of trading using opposite GM and Alpine High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Alpine High 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 Alpine High will offset losses from the drop in Alpine High's long position.The idea behind General Motors and Alpine High Yield 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.| Alpine High vs. Nuveen High Yield | Alpine High vs. Nuveen High Yield | Alpine High vs. Nuveen High Yield | Alpine High vs. Nuveen High Yield |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
Other Complementary Tools
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals |