Correlation Between GM and Ariel International
Can any of the company-specific risk be diversified away by investing in both GM and Ariel International 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 Ariel International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Ariel International Fund, you can compare the effects of market volatilities on GM and Ariel International 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 Ariel International. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Ariel International.
Diversification Opportunities for GM and Ariel International
-0.83 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GM and ARIEL is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Ariel International Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ariel International 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 Ariel International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ariel International has no effect on the direction of GM i.e., GM and Ariel International go up and down completely randomly.
Pair Corralation between GM and Ariel International
Allowing for the 90-day total investment horizon General Motors is expected to generate 3.74 times more return on investment than Ariel International. However, GM is 3.74 times more volatile than Ariel International Fund. It trades about 0.19 of its potential returns per unit of risk. Ariel International Fund is currently generating about -0.25 per unit of risk. If you would invest 4,484 in General Motors on August 29, 2024 and sell it today you would earn a total of 995.00 from holding General Motors or generate 22.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Ariel International Fund
Performance |
| Timeline |
| General Motors |
| Ariel International |
GM and Ariel International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Ariel International
The main advantage of trading using opposite GM and Ariel International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Ariel International 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 Ariel International will offset losses from the drop in Ariel International's long position.The idea behind General Motors and Ariel International Fund 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.| Ariel International vs. Blrc Sgy Mnp | Ariel International vs. Ambrus Core Bond | Ariel International vs. Artisan Emerging Markets | Ariel International vs. Transamerica Emerging Markets |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
Other Complementary Tools
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA |