Correlation Between GM and CaliberCos
Can any of the company-specific risk be diversified away by investing in both GM and CaliberCos 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 CaliberCos into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and CaliberCos Class A, you can compare the effects of market volatilities on GM and CaliberCos 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 CaliberCos. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and CaliberCos.
Diversification Opportunities for GM and CaliberCos
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GM and CaliberCos is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and CaliberCos Class A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CaliberCos Class A 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 CaliberCos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CaliberCos Class A has no effect on the direction of GM i.e., GM and CaliberCos go up and down completely randomly.
Pair Corralation between GM and CaliberCos
Allowing for the 90-day total investment horizon General Motors is expected to generate 0.38 times more return on investment than CaliberCos. However, General Motors is 2.61 times less risky than CaliberCos. It trades about 0.09 of its potential returns per unit of risk. CaliberCos Class A is currently generating about -0.02 per unit of risk. If you would invest 4,602 in General Motors on September 12, 2024 and sell it today you would earn a total of 602.00 from holding General Motors or generate 13.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. CaliberCos Class A
Performance |
| Timeline |
| General Motors |
| CaliberCos Class A |
GM and CaliberCos Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and CaliberCos
The main advantage of trading using opposite GM and CaliberCos positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, CaliberCos 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 CaliberCos will offset losses from the drop in CaliberCos' long position.The idea behind General Motors and CaliberCos Class A 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.| CaliberCos vs. Contagious Gaming | CaliberCos vs. Newpark Resources | CaliberCos vs. Tritent International Agriculture | CaliberCos vs. Tyson Foods |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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