Correlation Between GM and Real Estate
Can any of the company-specific risk be diversified away by investing in both GM and Real Estate 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 Real Estate into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Real Estate 11, you can compare the effects of market volatilities on GM and Real Estate 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 Real Estate. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Real Estate.
Diversification Opportunities for GM and Real Estate
-0.79 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GM and Real is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Real Estate 11 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Real Estate 11 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 Real Estate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Real Estate 11 has no effect on the direction of GM i.e., GM and Real Estate go up and down completely randomly.
Pair Corralation between GM and Real Estate
Allowing for the 90-day total investment horizon General Motors is expected to generate 0.94 times more return on investment than Real Estate. However, General Motors is 1.06 times less risky than Real Estate. It trades about 0.07 of its potential returns per unit of risk. Real Estate 11 is currently generating about -0.05 per unit of risk. If you would invest 3,536 in General Motors on August 31, 2024 and sell it today you would earn a total of 2,023 from holding General Motors or generate 57.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 78.61% |
| Values | Daily Returns |
General Motors vs. Real Estate 11
Performance |
| Timeline |
| General Motors |
| Real Estate 11 |
GM and Real Estate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Real Estate
The main advantage of trading using opposite GM and Real Estate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Real Estate 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 Real Estate will offset losses from the drop in Real Estate's long position.The idea behind General Motors and Real Estate 11 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.| Real Estate vs. Nafoods Group JSC | Real Estate vs. Dinhvu Port Investment | Real Estate vs. Vu Dang Investment | Real Estate vs. Telecoms Informatics JSC |
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.
Other Complementary Tools
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. |