Correlation Between GM and Alpine Realty
Can any of the company-specific risk be diversified away by investing in both GM and Alpine Realty 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 Realty 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 Realty Income, you can compare the effects of market volatilities on GM and Alpine Realty 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 Realty. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Alpine Realty.
Diversification Opportunities for GM and Alpine Realty
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between GM and Alpine is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Alpine Realty Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alpine Realty Income 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 Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alpine Realty Income has no effect on the direction of GM i.e., GM and Alpine Realty go up and down completely randomly.
Pair Corralation between GM and Alpine Realty
Allowing for the 90-day total investment horizon General Motors is expected to generate 2.64 times more return on investment than Alpine Realty. However, GM is 2.64 times more volatile than Alpine Realty Income. It trades about 0.08 of its potential returns per unit of risk. Alpine Realty Income is currently generating about 0.2 per unit of risk. If you would invest 4,551 in General Motors on September 1, 2024 and sell it today you would earn a total of 1,008 from holding General Motors or generate 22.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Alpine Realty Income
Performance |
| Timeline |
| General Motors |
| Alpine Realty Income |
GM and Alpine Realty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Alpine Realty
The main advantage of trading using opposite GM and Alpine Realty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Alpine Realty 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 Realty will offset losses from the drop in Alpine Realty's long position.The idea behind General Motors and Alpine Realty Income 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 Realty vs. Third Avenue Real | Alpine Realty vs. Victory Global Natural | Alpine Realty vs. Real Estate Fund | Alpine Realty vs. Aegis Value Fund |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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