Correlation Between GM and 3X AMD
Can any of the company-specific risk be diversified away by investing in both GM and 3X AMD 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 3X AMD into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and 3X AMD, you can compare the effects of market volatilities on GM and 3X AMD 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 3X AMD. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and 3X AMD.
Diversification Opportunities for GM and 3X AMD
Pay attention - limited upside
The 3 months correlation between GM and AMD3 is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and 3X AMD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 3X AMD 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 3X AMD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 3X AMD has no effect on the direction of GM i.e., GM and 3X AMD go up and down completely randomly.
Pair Corralation between GM and 3X AMD
If you would invest 5,096 in General Motors on September 2, 2024 and sell it today you would earn a total of 463.00 from holding General Motors or generate 9.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
General Motors vs. 3X AMD
Performance |
| Timeline |
| General Motors |
| 3X AMD |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
GM and 3X AMD Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and 3X AMD
The main advantage of trading using opposite GM and 3X AMD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, 3X AMD 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 3X AMD will offset losses from the drop in 3X AMD's long position.The idea behind General Motors and 3X AMD 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.| 3X AMD vs. Amundi Index Solutions | 3X AMD vs. Multi Units Luxembourg | 3X AMD vs. iShares Digital Entertainment | 3X AMD vs. Amundi Index Solutions |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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