Correlation Between GM and Leuthold Global
Can any of the company-specific risk be diversified away by investing in both GM and Leuthold 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 Leuthold 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 Leuthold Global Fund, you can compare the effects of market volatilities on GM and Leuthold 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 Leuthold Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Leuthold Global.
Diversification Opportunities for GM and Leuthold Global
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between GM and Leuthold is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Leuthold Global Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leuthold Global 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 Leuthold Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leuthold Global has no effect on the direction of GM i.e., GM and Leuthold Global go up and down completely randomly.
Pair Corralation between GM and Leuthold Global
Allowing for the 90-day total investment horizon General Motors is expected to under-perform the Leuthold Global. In addition to that, GM is 4.56 times more volatile than Leuthold Global Fund. It trades about -0.15 of its total potential returns per unit of risk. Leuthold Global Fund is currently generating about -0.17 per unit of volatility. If you would invest 904.00 in Leuthold Global Fund on September 15, 2024 and sell it today you would lose (19.00) from holding Leuthold Global Fund or give up 2.1% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Leuthold Global Fund
Performance |
| Timeline |
| General Motors |
| Leuthold Global |
GM and Leuthold Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Leuthold Global
The main advantage of trading using opposite GM and Leuthold Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Leuthold 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 Leuthold Global will offset losses from the drop in Leuthold Global's long position.The idea behind General Motors and Leuthold Global Fund 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.| Leuthold Global vs. Leuthold Select Industries | Leuthold Global vs. Leuthold E Investment | Leuthold Global vs. Leuthold E Investment | Leuthold Global vs. Grizzly Short Fund |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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