Correlation Between GM and Mainstay Fiera
Can any of the company-specific risk be diversified away by investing in both GM and Mainstay Fiera 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 Mainstay Fiera into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Mainstay Fiera Smid, you can compare the effects of market volatilities on GM and Mainstay Fiera 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 Mainstay Fiera. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Mainstay Fiera.
Diversification Opportunities for GM and Mainstay Fiera
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between GM and Mainstay is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Mainstay Fiera Smid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mainstay Fiera Smid 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 Mainstay Fiera. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mainstay Fiera Smid has no effect on the direction of GM i.e., GM and Mainstay Fiera go up and down completely randomly.
Pair Corralation between GM and Mainstay Fiera
Allowing for the 90-day total investment horizon General Motors is expected to generate 1.57 times more return on investment than Mainstay Fiera. However, GM is 1.57 times more volatile than Mainstay Fiera Smid. It trades about 0.31 of its potential returns per unit of risk. Mainstay Fiera Smid is currently generating about 0.37 per unit of risk. If you would invest 5,273 in General Motors on August 28, 2024 and sell it today you would earn a total of 747.00 from holding General Motors or generate 14.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
General Motors vs. Mainstay Fiera Smid
Performance |
| Timeline |
| General Motors |
| Mainstay Fiera Smid |
GM and Mainstay Fiera Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Mainstay Fiera
The main advantage of trading using opposite GM and Mainstay Fiera positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Mainstay Fiera 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 Mainstay Fiera will offset losses from the drop in Mainstay Fiera's long position.The idea behind General Motors and Mainstay Fiera Smid 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.| Mainstay Fiera vs. Mainstay High Yield | Mainstay Fiera vs. Mainstay Tax Free | Mainstay Fiera vs. Mainstay Income Builder | Mainstay Fiera vs. Mainstay Large Cap |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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