Correlation Between GM and Xtrackers Harvest
Can any of the company-specific risk be diversified away by investing in both GM and Xtrackers Harvest 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 Xtrackers Harvest into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Xtrackers Harvest CSI300, you can compare the effects of market volatilities on GM and Xtrackers Harvest 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 Xtrackers Harvest. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Xtrackers Harvest.
Diversification Opportunities for GM and Xtrackers Harvest
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between GM and Xtrackers is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Xtrackers Harvest CSI300 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers Harvest CSI300 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 Xtrackers Harvest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtrackers Harvest CSI300 has no effect on the direction of GM i.e., GM and Xtrackers Harvest go up and down completely randomly.
Pair Corralation between GM and Xtrackers Harvest
Allowing for the 90-day total investment horizon General Motors is expected to generate 1.3 times more return on investment than Xtrackers Harvest. However, GM is 1.3 times more volatile than Xtrackers Harvest CSI300. It trades about 0.07 of its potential returns per unit of risk. Xtrackers Harvest CSI300 is currently generating about 0.01 per unit of risk. If you would invest 3,617 in General Motors on September 2, 2024 and sell it today you would earn a total of 1,942 from holding General Motors or generate 53.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 98.67% |
| Values | Daily Returns |
General Motors vs. Xtrackers Harvest CSI300
Performance |
| Timeline |
| General Motors |
| Xtrackers Harvest CSI300 |
GM and Xtrackers Harvest Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Xtrackers Harvest
The main advantage of trading using opposite GM and Xtrackers Harvest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Xtrackers Harvest 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 Xtrackers Harvest will offset losses from the drop in Xtrackers Harvest's long position.The idea behind General Motors and Xtrackers Harvest CSI300 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.| Xtrackers Harvest vs. Xtrackers MSCI | Xtrackers Harvest vs. Xtrackers FTSE 250 | Xtrackers Harvest vs. Xtrackers Ie Plc | Xtrackers Harvest vs. Xtrackers Russell 2000 |
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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