Correlation Between GM and CD Private
Can any of the company-specific risk be diversified away by investing in both GM and CD Private 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 CD Private into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and CD Private Equity, you can compare the effects of market volatilities on GM and CD Private 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 CD Private. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and CD Private.
Diversification Opportunities for GM and CD Private
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between GM and CD3 is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and CD Private Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CD Private Equity 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 CD Private. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CD Private Equity has no effect on the direction of GM i.e., GM and CD Private go up and down completely randomly.
Pair Corralation between GM and CD Private
Allowing for the 90-day total investment horizon General Motors is expected to generate 1.21 times more return on investment than CD Private. However, GM is 1.21 times more volatile than CD Private Equity. It trades about 0.05 of its potential returns per unit of risk. CD Private Equity is currently generating about 0.05 per unit of risk. If you would invest 3,807 in General Motors on August 26, 2024 and sell it today you would earn a total of 2,046 from holding General Motors or generate 53.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.4% |
| Values | Daily Returns |
General Motors vs. CD Private Equity
Performance |
| Timeline |
| General Motors |
| CD Private Equity |
GM and CD Private Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and CD Private
The main advantage of trading using opposite GM and CD Private positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, CD Private 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 CD Private will offset losses from the drop in CD Private's long position.The idea behind General Motors and CD Private Equity 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.| CD Private vs. iShares MSCI Emerging | CD Private vs. Global X Hydrogen | CD Private vs. Janus Henderson Sustainable | CD Private vs. JPMorgan Equity Premium |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
Other Complementary Tools
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device |