Correlation Between GM and Harbor Convertible
Can any of the company-specific risk be diversified away by investing in both GM and Harbor Convertible 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 Harbor Convertible into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Harbor Vertible Securities, you can compare the effects of market volatilities on GM and Harbor Convertible 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 Harbor Convertible. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Harbor Convertible.
Diversification Opportunities for GM and Harbor Convertible
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between GM and Harbor is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Harbor Vertible Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harbor Vertible Secu 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 Harbor Convertible. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harbor Vertible Secu has no effect on the direction of GM i.e., GM and Harbor Convertible go up and down completely randomly.
Pair Corralation between GM and Harbor Convertible
Allowing for the 90-day total investment horizon General Motors is expected to generate 3.92 times more return on investment than Harbor Convertible. However, GM is 3.92 times more volatile than Harbor Vertible Securities. It trades about 0.07 of its potential returns per unit of risk. Harbor Vertible Securities is currently generating about 0.13 per unit of risk. If you would invest 3,311 in General Motors on August 29, 2024 and sell it today you would earn a total of 2,168 from holding General Motors or generate 65.48% 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. Harbor Vertible Securities
Performance |
| Timeline |
| General Motors |
| Harbor Vertible Secu |
GM and Harbor Convertible Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Harbor Convertible
The main advantage of trading using opposite GM and Harbor Convertible positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Harbor Convertible 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 Harbor Convertible will offset losses from the drop in Harbor Convertible's long position.The idea behind General Motors and Harbor Vertible Securities 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.| Harbor Convertible vs. Putnam Vertible Securities | Harbor Convertible vs. Columbia Vertible Securities | Harbor Convertible vs. Lord Abbett Convertible | Harbor Convertible vs. Franklin Vertible Securities |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
Other Complementary Tools
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments |