Correlation Between GM and Unity Wealth
Can any of the company-specific risk be diversified away by investing in both GM and Unity Wealth 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 Unity Wealth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Unity Wealth Partners, you can compare the effects of market volatilities on GM and Unity Wealth 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 Unity Wealth. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Unity Wealth.
Diversification Opportunities for GM and Unity Wealth
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GM and Unity is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Unity Wealth Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unity Wealth 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 Unity Wealth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unity Wealth Partners has no effect on the direction of GM i.e., GM and Unity Wealth go up and down completely randomly.
Pair Corralation between GM and Unity Wealth
Allowing for the 90-day total investment horizon General Motors is expected to generate 2.57 times more return on investment than Unity Wealth. However, GM is 2.57 times more volatile than Unity Wealth Partners. It trades about 0.05 of its potential returns per unit of risk. Unity Wealth Partners is currently generating about 0.11 per unit of risk. If you would invest 3,757 in General Motors on August 30, 2024 and sell it today you would earn a total of 1,793 from holding General Motors or generate 47.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 18.38% |
| Values | Daily Returns |
General Motors vs. Unity Wealth Partners
Performance |
| Timeline |
| General Motors |
| Unity Wealth Partners |
GM and Unity Wealth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Unity Wealth
The main advantage of trading using opposite GM and Unity Wealth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Unity Wealth 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 Unity Wealth will offset losses from the drop in Unity Wealth's long position.The idea behind General Motors and Unity Wealth Partners 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.| Unity Wealth vs. Global X SP | Unity Wealth vs. Amplify CWP Enhanced | Unity Wealth vs. Global X Russell | Unity Wealth vs. JPMorgan Nasdaq Equity |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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