Correlation Between GM and Assetwise Public
Can any of the company-specific risk be diversified away by investing in both GM and Assetwise Public 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 Assetwise Public into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Assetwise Public, you can compare the effects of market volatilities on GM and Assetwise Public 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 Assetwise Public. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Assetwise Public.
Diversification Opportunities for GM and Assetwise Public
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GM and Assetwise is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Assetwise Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Assetwise Public 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 Assetwise Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Assetwise Public has no effect on the direction of GM i.e., GM and Assetwise Public go up and down completely randomly.
Pair Corralation between GM and Assetwise Public
Allowing for the 90-day total investment horizon General Motors is expected to generate 2.73 times more return on investment than Assetwise Public. However, GM is 2.73 times more volatile than Assetwise Public. It trades about 0.13 of its potential returns per unit of risk. Assetwise Public is currently generating about 0.03 per unit of risk. If you would invest 5,154 in General Motors on August 30, 2024 and sell it today you would earn a total of 396.00 from holding General Motors or generate 7.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Assetwise Public
Performance |
| Timeline |
| General Motors |
| Assetwise Public |
GM and Assetwise Public Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Assetwise Public
The main advantage of trading using opposite GM and Assetwise Public positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Assetwise Public 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 Assetwise Public will offset losses from the drop in Assetwise Public's long position.The idea behind General Motors and Assetwise Public 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.| Assetwise Public vs. Asset World Corp | Assetwise Public vs. Lalin Property Public | Assetwise Public vs. AP Public | Assetwise Public vs. Ananda Development Public |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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