Correlation Between GM and BetaShares Climate
Can any of the company-specific risk be diversified away by investing in both GM and BetaShares Climate 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 BetaShares Climate into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and BetaShares Climate Change, you can compare the effects of market volatilities on GM and BetaShares Climate 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 BetaShares Climate. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and BetaShares Climate.
Diversification Opportunities for GM and BetaShares Climate
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between GM and BetaShares is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and BetaShares Climate Change in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BetaShares Climate Change 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 BetaShares Climate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BetaShares Climate Change has no effect on the direction of GM i.e., GM and BetaShares Climate go up and down completely randomly.
Pair Corralation between GM and BetaShares Climate
Allowing for the 90-day total investment horizon General Motors is expected to generate 2.31 times more return on investment than BetaShares Climate. However, GM is 2.31 times more volatile than BetaShares Climate Change. It trades about 0.17 of its potential returns per unit of risk. BetaShares Climate Change is currently generating about -0.04 per unit of risk. If you would invest 5,076 in General Motors on September 1, 2024 and sell it today you would earn a total of 483.00 from holding General Motors or generate 9.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
General Motors vs. BetaShares Climate Change
Performance |
| Timeline |
| General Motors |
| BetaShares Climate Change |
GM and BetaShares Climate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and BetaShares Climate
The main advantage of trading using opposite GM and BetaShares Climate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, BetaShares Climate 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 BetaShares Climate will offset losses from the drop in BetaShares Climate's long position.The idea behind General Motors and BetaShares Climate Change 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.| BetaShares Climate vs. Champion Iron | BetaShares Climate vs. Australian Dairy Farms | BetaShares Climate vs. Perpetual Credit Income | BetaShares Climate vs. Greentech Metals |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
Other Complementary Tools
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Fundamental Analysis View fundamental data based on most recent published financial statements |