Correlation Between GM and Pioneer Disciplined
Can any of the company-specific risk be diversified away by investing in both GM and Pioneer Disciplined 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 Pioneer Disciplined into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Pioneer Disciplined Value, you can compare the effects of market volatilities on GM and Pioneer Disciplined 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 Pioneer Disciplined. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Pioneer Disciplined.
Diversification Opportunities for GM and Pioneer Disciplined
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GM and Pioneer is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Pioneer Disciplined Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pioneer Disciplined Value 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 Pioneer Disciplined. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pioneer Disciplined Value has no effect on the direction of GM i.e., GM and Pioneer Disciplined go up and down completely randomly.
Pair Corralation between GM and Pioneer Disciplined
Allowing for the 90-day total investment horizon General Motors is expected to generate 3.14 times more return on investment than Pioneer Disciplined. However, GM is 3.14 times more volatile than Pioneer Disciplined Value. It trades about 0.09 of its potential returns per unit of risk. Pioneer Disciplined Value is currently generating about 0.12 per unit of risk. If you would invest 4,476 in General Motors on August 29, 2024 and sell it today you would earn a total of 1,074 from holding General Motors or generate 23.99% 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. Pioneer Disciplined Value
Performance |
| Timeline |
| General Motors |
| Pioneer Disciplined Value |
GM and Pioneer Disciplined Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Pioneer Disciplined
The main advantage of trading using opposite GM and Pioneer Disciplined positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Pioneer Disciplined 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 Pioneer Disciplined will offset losses from the drop in Pioneer Disciplined's long position.The idea behind General Motors and Pioneer Disciplined Value 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.| Pioneer Disciplined vs. Delaware Healthcare Fund | Pioneer Disciplined vs. Live Oak Health | Pioneer Disciplined vs. Health Biotchnology Portfolio | Pioneer Disciplined vs. Tekla Healthcare Opportunities |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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