Correlation Between GM and Invesco Total
Can any of the company-specific risk be diversified away by investing in both GM and Invesco Total 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 Invesco Total into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Invesco Total Return, you can compare the effects of market volatilities on GM and Invesco Total 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 Invesco Total. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Invesco Total.
Diversification Opportunities for GM and Invesco Total
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GM and Invesco is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Invesco Total Return in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Total Return 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 Invesco Total. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Total Return has no effect on the direction of GM i.e., GM and Invesco Total go up and down completely randomly.
Pair Corralation between GM and Invesco Total
Allowing for the 90-day total investment horizon General Motors is expected to generate 8.49 times more return on investment than Invesco Total. However, GM is 8.49 times more volatile than Invesco Total Return. It trades about 0.12 of its potential returns per unit of risk. Invesco Total Return is currently generating about 0.08 per unit of risk. If you would invest 5,197 in General Motors on August 31, 2024 and sell it today you would earn a total of 353.00 from holding General Motors or generate 6.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Invesco Total Return
Performance |
| Timeline |
| General Motors |
| Invesco Total Return |
GM and Invesco Total Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Invesco Total
The main advantage of trading using opposite GM and Invesco Total positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Invesco Total 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 Invesco Total will offset losses from the drop in Invesco Total's long position.The idea behind General Motors and Invesco Total Return 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.| Invesco Total vs. Fidelity Total Bond | Invesco Total vs. PIMCO Enhanced Low | Invesco Total vs. iShares Yield Optimized | Invesco Total vs. Invesco Variable Rate |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
Other Complementary Tools
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm |