Correlation Between GM and Clarkston Partners
Can any of the company-specific risk be diversified away by investing in both GM and Clarkston Partners 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 Clarkston Partners into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Clarkston Partners Fund, you can compare the effects of market volatilities on GM and Clarkston Partners 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 Clarkston Partners. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Clarkston Partners.
Diversification Opportunities for GM and Clarkston Partners
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GM and Clarkston is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Clarkston Partners Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clarkston Partners 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 Clarkston Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clarkston Partners has no effect on the direction of GM i.e., GM and Clarkston Partners go up and down completely randomly.
Pair Corralation between GM and Clarkston Partners
Allowing for the 90-day total investment horizon General Motors is expected to generate 2.09 times more return on investment than Clarkston Partners. However, GM is 2.09 times more volatile than Clarkston Partners Fund. It trades about 0.05 of its potential returns per unit of risk. Clarkston Partners Fund is currently generating about 0.03 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 | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Clarkston Partners Fund
Performance |
| Timeline |
| General Motors |
| Clarkston Partners |
GM and Clarkston Partners Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Clarkston Partners
The main advantage of trading using opposite GM and Clarkston Partners positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Clarkston Partners 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 Clarkston Partners will offset losses from the drop in Clarkston Partners' long position.The idea behind General Motors and Clarkston Partners Fund 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.| Clarkston Partners vs. Clarkston Founders | Clarkston Partners vs. Clarkston Partners Fund | Clarkston Partners vs. Vanguard Target Retirement | Clarkston Partners vs. Vanguard Tax Managed Balanced |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
Other Complementary Tools
| Transaction History View history of all your transactions and understand their impact on performance | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing |