Correlation Between GM and Kovitz Core
Can any of the company-specific risk be diversified away by investing in both GM and Kovitz Core 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 Kovitz Core into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Kovitz Core Equity, you can compare the effects of market volatilities on GM and Kovitz Core 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 Kovitz Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Kovitz Core.
Diversification Opportunities for GM and Kovitz Core
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between GM and Kovitz is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Kovitz Core Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kovitz Core Equity 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 Kovitz Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kovitz Core Equity has no effect on the direction of GM i.e., GM and Kovitz Core go up and down completely randomly.
Pair Corralation between GM and Kovitz Core
Allowing for the 90-day total investment horizon General Motors is expected to generate 1.51 times more return on investment than Kovitz Core. However, GM is 1.51 times more volatile than Kovitz Core Equity. It trades about -0.14 of its potential returns per unit of risk. Kovitz Core Equity is currently generating about -0.31 per unit of risk. If you would invest 4,836 in General Motors on January 4, 2025 and sell it today you would lose (418.00) from holding General Motors or give up 8.64% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Kovitz Core Equity
Performance |
| Timeline |
| General Motors |
| Kovitz Core Equity |
GM and Kovitz Core Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Kovitz Core
The main advantage of trading using opposite GM and Kovitz Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Kovitz Core 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 Kovitz Core will offset losses from the drop in Kovitz Core's long position.The idea behind General Motors and Kovitz Core Equity 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.| Kovitz Core vs. Vanguard Total Stock | Kovitz Core vs. SPDR SP 500 | Kovitz Core vs. iShares Core SP | Kovitz Core vs. Vanguard Dividend Appreciation |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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