Correlation Between GM and Driehaus International
Can any of the company-specific risk be diversified away by investing in both GM and Driehaus International 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 Driehaus International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Driehaus International Small, you can compare the effects of market volatilities on GM and Driehaus International 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 Driehaus International. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Driehaus International.
Diversification Opportunities for GM and Driehaus International
-0.82 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GM and Driehaus is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Driehaus International Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Driehaus International 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 Driehaus International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Driehaus International has no effect on the direction of GM i.e., GM and Driehaus International go up and down completely randomly.
Pair Corralation between GM and Driehaus International
Allowing for the 90-day total investment horizon General Motors is expected to generate 4.01 times more return on investment than Driehaus International. However, GM is 4.01 times more volatile than Driehaus International Small. It trades about 0.07 of its potential returns per unit of risk. Driehaus International Small is currently generating about -0.15 per unit of risk. If you would invest 5,273 in General Motors on August 29, 2024 and sell it today you would earn a total of 206.00 from holding General Motors or generate 3.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Driehaus International Small
Performance |
| Timeline |
| General Motors |
| Driehaus International |
GM and Driehaus International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Driehaus International
The main advantage of trading using opposite GM and Driehaus International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Driehaus International 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 Driehaus International will offset losses from the drop in Driehaus International's long position.The idea behind General Motors and Driehaus International Small 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.| Driehaus International vs. The Hartford Equity | Driehaus International vs. Dodge International Stock | Driehaus International vs. Rbc Global Equity | Driehaus International vs. Ultra Short Fixed Income |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
Other Complementary Tools
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Equity Valuation Check real value of public entities based on technical and fundamental data |