Correlation Between GM and Fpa New
Can any of the company-specific risk be diversified away by investing in both GM and Fpa New 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 Fpa New into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Fpa New Income, you can compare the effects of market volatilities on GM and Fpa New 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 Fpa New. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Fpa New.
Diversification Opportunities for GM and Fpa New
Pay attention - limited upside
The 3 months correlation between GM and Fpa is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Fpa New Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fpa New Income 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 Fpa New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fpa New Income has no effect on the direction of GM i.e., GM and Fpa New go up and down completely randomly.
Pair Corralation between GM and Fpa New
Allowing for the 90-day total investment horizon General Motors is expected to generate 11.23 times more return on investment than Fpa New. However, GM is 11.23 times more volatile than Fpa New Income. It trades about 0.07 of its potential returns per unit of risk. Fpa New Income is currently generating about 0.15 per unit of risk. If you would invest 3,536 in General Motors on August 31, 2024 and sell it today you would earn a total of 2,023 from holding General Motors or generate 57.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 99.73% |
| Values | Daily Returns |
General Motors vs. Fpa New Income
Performance |
| Timeline |
| General Motors |
| Fpa New Income |
GM and Fpa New Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Fpa New
The main advantage of trading using opposite GM and Fpa New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Fpa New 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 Fpa New will offset losses from the drop in Fpa New's long position.The idea behind General Motors and Fpa New Income 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.| Fpa New vs. Locorr Dynamic Equity | Fpa New vs. Ms Global Fixed | Fpa New vs. Huber Capital Equity | Fpa New vs. Icon Equity Income |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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