Correlation Between GM and Nuveen Limited
Can any of the company-specific risk be diversified away by investing in both GM and Nuveen Limited 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 Nuveen Limited into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Nuveen Limited Term, you can compare the effects of market volatilities on GM and Nuveen Limited 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 Nuveen Limited. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Nuveen Limited.
Diversification Opportunities for GM and Nuveen Limited
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between GM and Nuveen is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Nuveen Limited Term in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen Limited Term 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 Nuveen Limited. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen Limited Term has no effect on the direction of GM i.e., GM and Nuveen Limited go up and down completely randomly.
Pair Corralation between GM and Nuveen Limited
Allowing for the 90-day total investment horizon General Motors is expected to generate 14.31 times more return on investment than Nuveen Limited. However, GM is 14.31 times more volatile than Nuveen Limited Term. It trades about 0.17 of its potential returns per unit of risk. Nuveen Limited Term is currently generating about 0.23 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 Against |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
General Motors vs. Nuveen Limited Term
Performance |
| Timeline |
| General Motors |
| Nuveen Limited Term |
GM and Nuveen Limited Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Nuveen Limited
The main advantage of trading using opposite GM and Nuveen Limited positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Nuveen Limited 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 Nuveen Limited will offset losses from the drop in Nuveen Limited's long position.The idea behind General Motors and Nuveen Limited Term 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.| Nuveen Limited vs. Franklin Emerging Market | Nuveen Limited vs. Rbc Emerging Markets | Nuveen Limited vs. Shelton Emerging Markets | Nuveen Limited vs. Origin Emerging Markets |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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