Correlation Between GM and Hartford Inflation
Can any of the company-specific risk be diversified away by investing in both GM and Hartford Inflation 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 Hartford Inflation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and The Hartford Inflation, you can compare the effects of market volatilities on GM and Hartford Inflation 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 Hartford Inflation. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Hartford Inflation.
Diversification Opportunities for GM and Hartford Inflation
-0.84 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GM and Hartford is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and The Hartford Inflation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Hartford Inflation 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 Hartford Inflation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of The Hartford Inflation has no effect on the direction of GM i.e., GM and Hartford Inflation go up and down completely randomly.
Pair Corralation between GM and Hartford Inflation
Allowing for the 90-day total investment horizon General Motors is expected to under-perform the Hartford Inflation. In addition to that, GM is 17.88 times more volatile than The Hartford Inflation. It trades about -0.17 of its total potential returns per unit of risk. The Hartford Inflation is currently generating about 0.06 per unit of volatility. If you would invest 1,025 in The Hartford Inflation on September 12, 2024 and sell it today you would earn a total of 2.00 from holding The Hartford Inflation or generate 0.2% 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. The Hartford Inflation
Performance |
| Timeline |
| General Motors |
| The Hartford Inflation |
GM and Hartford Inflation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Hartford Inflation
The main advantage of trading using opposite GM and Hartford Inflation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Hartford Inflation 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 Hartford Inflation will offset losses from the drop in Hartford Inflation's long position.The idea behind General Motors and The Hartford Inflation 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.| Hartford Inflation vs. Pace International Emerging | Hartford Inflation vs. Vy Jpmorgan Emerging | Hartford Inflation vs. Shelton Emerging Markets | Hartford Inflation vs. Nasdaq 100 2x Strategy |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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