Correlation Between GM and Allianzgi Global
Can any of the company-specific risk be diversified away by investing in both GM and Allianzgi Global 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 Allianzgi Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Allianzgi Global Water, you can compare the effects of market volatilities on GM and Allianzgi Global 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 Allianzgi Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Allianzgi Global.
Diversification Opportunities for GM and Allianzgi Global
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between GM and ALLIANZGI is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Allianzgi Global Water in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allianzgi Global Water 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 Allianzgi Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allianzgi Global Water has no effect on the direction of GM i.e., GM and Allianzgi Global go up and down completely randomly.
Pair Corralation between GM and Allianzgi Global
Allowing for the 90-day total investment horizon General Motors is expected to generate 2.75 times more return on investment than Allianzgi Global. However, GM is 2.75 times more volatile than Allianzgi Global Water. It trades about 0.11 of its potential returns per unit of risk. Allianzgi Global Water is currently generating about 0.18 per unit of risk. If you would invest 3,331 in General Motors on September 4, 2024 and sell it today you would earn a total of 2,035 from holding General Motors or generate 61.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 45.75% |
| Values | Daily Returns |
General Motors vs. Allianzgi Global Water
Performance |
| Timeline |
| General Motors |
| Allianzgi Global Water |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
GM and Allianzgi Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Allianzgi Global
The main advantage of trading using opposite GM and Allianzgi Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Allianzgi Global 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 Allianzgi Global will offset losses from the drop in Allianzgi Global's long position.The idea behind General Motors and Allianzgi Global Water 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.| Allianzgi Global vs. Jhancock Disciplined Value | Allianzgi Global vs. Qs Large Cap | Allianzgi Global vs. Tax Managed Large Cap | Allianzgi Global vs. M 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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