Correlation Between GM and Atrium Mortgage
Can any of the company-specific risk be diversified away by investing in both GM and Atrium Mortgage 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 Atrium Mortgage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Atrium Mortgage Investment, you can compare the effects of market volatilities on GM and Atrium Mortgage 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 Atrium Mortgage. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Atrium Mortgage.
Diversification Opportunities for GM and Atrium Mortgage
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between GM and Atrium is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Atrium Mortgage Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atrium Mortgage Inve 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 Atrium Mortgage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atrium Mortgage Inve has no effect on the direction of GM i.e., GM and Atrium Mortgage go up and down completely randomly.
Pair Corralation between GM and Atrium Mortgage
Allowing for the 90-day total investment horizon General Motors is expected to generate 2.61 times more return on investment than Atrium Mortgage. However, GM is 2.61 times more volatile than Atrium Mortgage Investment. It trades about 0.12 of its potential returns per unit of risk. Atrium Mortgage Investment is currently generating about -0.08 per unit of risk. If you would invest 5,180 in General Motors on September 4, 2024 and sell it today you would earn a total of 324.00 from holding General Motors or generate 6.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Atrium Mortgage Investment
Performance |
| Timeline |
| General Motors |
| Atrium Mortgage Inve |
GM and Atrium Mortgage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Atrium Mortgage
The main advantage of trading using opposite GM and Atrium Mortgage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Atrium Mortgage 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 Atrium Mortgage will offset losses from the drop in Atrium Mortgage's long position.The idea behind General Motors and Atrium Mortgage Investment 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.| Atrium Mortgage vs. Western Asset Global | Atrium Mortgage vs. Invesco Trust For | Atrium Mortgage vs. Logan Ridge Finance | Atrium Mortgage vs. Invesco Advantage MIT |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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