Correlation Between GM and CI Global
Can any of the company-specific risk be diversified away by investing in both GM and CI 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 CI 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 CI Global Financial, you can compare the effects of market volatilities on GM and CI 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 CI Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and CI Global.
Diversification Opportunities for GM and CI Global
Very poor diversification
The 3 months correlation between GM and FSF is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and CI Global Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CI Global Financial 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 CI Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CI Global Financial has no effect on the direction of GM i.e., GM and CI Global go up and down completely randomly.
Pair Corralation between GM and CI Global
Allowing for the 90-day total investment horizon GM is expected to generate 1.14 times less return on investment than CI Global. In addition to that, GM is 3.43 times more volatile than CI Global Financial. It trades about 0.07 of its total potential returns per unit of risk. CI Global Financial is currently generating about 0.29 per unit of volatility. If you would invest 2,895 in CI Global Financial on August 29, 2024 and sell it today you would earn a total of 158.00 from holding CI Global Financial or generate 5.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. CI Global Financial
Performance |
| Timeline |
| General Motors |
| CI Global Financial |
GM and CI Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and CI Global
The main advantage of trading using opposite GM and CI Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, CI 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 CI Global will offset losses from the drop in CI Global's long position.The idea behind General Motors and CI Global Financial 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.| CI Global vs. Brompton Global Dividend | CI Global vs. Tech Leaders Income | CI Global vs. Global Healthcare Income | CI Global vs. Brompton European Dividend |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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