Correlation Between GM and Fidelity Global
Can any of the company-specific risk be diversified away by investing in both GM and Fidelity Global 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 Fidelity Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Fidelity Global Modity, you can compare the effects of market volatilities on GM and Fidelity Global 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 Fidelity Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Fidelity Global.
Diversification Opportunities for GM and Fidelity Global
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between GM and Fidelity is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Fidelity Global Modity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Global Modity 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 Fidelity Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Global Modity has no effect on the direction of GM i.e., GM and Fidelity Global go up and down completely randomly.
Pair Corralation between GM and Fidelity Global
Allowing for the 90-day total investment horizon General Motors is expected to generate 2.26 times more return on investment than Fidelity Global. However, GM is 2.26 times more volatile than Fidelity Global Modity. It trades about 0.08 of its potential returns per unit of risk. Fidelity Global Modity is currently generating about 0.01 per unit of risk. If you would invest 4,551 in General Motors on September 1, 2024 and sell it today you would earn a total of 1,008 from holding General Motors or generate 22.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
General Motors vs. Fidelity Global Modity
Performance |
| Timeline |
| General Motors |
| Fidelity Global Modity |
GM and Fidelity Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Fidelity Global
The main advantage of trading using opposite GM and Fidelity Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Fidelity Global 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 Fidelity Global will offset losses from the drop in Fidelity Global's long position.The idea behind General Motors and Fidelity Global Modity 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.| Fidelity Global vs. Materials Portfolio Materials | Fidelity Global vs. Fidelity Natural Resources | Fidelity Global vs. Utilities Portfolio Utilities | Fidelity Global vs. Automotive Portfolio Automotive |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
Other Complementary Tools
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum |