Correlation Between GM and IShares High
Can any of the company-specific risk be diversified away by investing in both GM and IShares High 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 IShares High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and iShares High Yield, you can compare the effects of market volatilities on GM and IShares High 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 IShares High. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and IShares High.
Diversification Opportunities for GM and IShares High
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GM and IShares is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and iShares High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares High Yield 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 IShares High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares High Yield has no effect on the direction of GM i.e., GM and IShares High go up and down completely randomly.
Pair Corralation between GM and IShares High
Allowing for the 90-day total investment horizon General Motors is expected to generate 18.67 times more return on investment than IShares High. However, GM is 18.67 times more volatile than iShares High Yield. It trades about 0.1 of its potential returns per unit of risk. iShares High Yield is currently generating about 0.21 per unit of risk. If you would invest 4,829 in General Motors on September 2, 2024 and sell it today you would earn a total of 730.00 from holding General Motors or generate 15.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.46% |
| Values | Daily Returns |
General Motors vs. iShares High Yield
Performance |
| Timeline |
| General Motors |
| iShares High Yield |
GM and IShares High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and IShares High
The main advantage of trading using opposite GM and IShares High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, IShares High 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 IShares High will offset losses from the drop in IShares High's long position.The idea behind General Motors and iShares High Yield 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.| IShares High vs. iShares Corp Bond | IShares High vs. iShares Emerging Asia | IShares High vs. iShares MSCI Global | IShares High vs. iShares VII PLC |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
Other Complementary Tools
| 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 | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine |