Correlation Between GM and Evolve Banks
Can any of the company-specific risk be diversified away by investing in both GM and Evolve Banks 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 Evolve Banks into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Evolve Banks Enhanced, you can compare the effects of market volatilities on GM and Evolve Banks 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 Evolve Banks. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Evolve Banks.
Diversification Opportunities for GM and Evolve Banks
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between GM and Evolve is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Evolve Banks Enhanced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evolve Banks Enhanced 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 Evolve Banks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evolve Banks Enhanced has no effect on the direction of GM i.e., GM and Evolve Banks go up and down completely randomly.
Pair Corralation between GM and Evolve Banks
Allowing for the 90-day total investment horizon General Motors is expected to generate 1.46 times more return on investment than Evolve Banks. However, GM is 1.46 times more volatile than Evolve Banks Enhanced. It trades about 0.2 of its potential returns per unit of risk. Evolve Banks Enhanced is currently generating about 0.23 per unit of risk. If you would invest 4,484 in General Motors on August 31, 2024 and sell it today you would earn a total of 1,066 from holding General Motors or generate 23.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 97.73% |
| Values | Daily Returns |
General Motors vs. Evolve Banks Enhanced
Performance |
| Timeline |
| General Motors |
| Evolve Banks Enhanced |
GM and Evolve Banks Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Evolve Banks
The main advantage of trading using opposite GM and Evolve Banks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Evolve Banks 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 Evolve Banks will offset losses from the drop in Evolve Banks' long position.The idea behind General Motors and Evolve Banks Enhanced 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.| Evolve Banks vs. Evolve Global Healthcare | Evolve Banks vs. Evolve Global Materials | Evolve Banks vs. Evolve Canadian Banks | Evolve Banks vs. Harvest Bank Leaders |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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