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 Bond, 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
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between GM and Fidelity is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Fidelity Global Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Global Bond 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 Bond 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 9.49 times more return on investment than Fidelity Global. However, GM is 9.49 times more volatile than Fidelity Global Bond. It trades about 0.09 of its potential returns per unit of risk. Fidelity Global Bond is currently generating about 0.08 per unit of risk. If you would invest 3,976 in General Motors on November 3, 2024 and sell it today you would earn a total of 970.00 from holding General Motors or generate 24.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.2% |
| Values | Daily Returns |
General Motors vs. Fidelity Global Bond
Performance |
| Timeline |
| General Motors |
| Fidelity Global Bond |
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 Bond 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. Fidelity Porate Bond | Fidelity Global vs. Fidelity Global Equity | Fidelity Global vs. Fidelity Total International | Fidelity Global vs. Fidelity Advisor Stock |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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