Correlation Between GM and Hedge Real
Can any of the company-specific risk be diversified away by investing in both GM and Hedge Real 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 Hedge Real into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Hedge Real Estate, you can compare the effects of market volatilities on GM and Hedge Real 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 Hedge Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Hedge Real.
Diversification Opportunities for GM and Hedge Real
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between GM and Hedge is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Hedge Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hedge Real Estate 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 Hedge Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hedge Real Estate has no effect on the direction of GM i.e., GM and Hedge Real go up and down completely randomly.
Pair Corralation between GM and Hedge Real
Allowing for the 90-day total investment horizon General Motors is expected to generate 2.28 times more return on investment than Hedge Real. However, GM is 2.28 times more volatile than Hedge Real Estate. It trades about 0.1 of its potential returns per unit of risk. Hedge Real Estate is currently generating about -0.01 per unit of risk. If you would invest 4,829 in General Motors on September 2, 2024 and sell it today you would earn a total of 730.00 from holding General Motors or generate 15.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Hedge Real Estate
Performance |
| Timeline |
| General Motors |
| Hedge Real Estate |
GM and Hedge Real Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Hedge Real
The main advantage of trading using opposite GM and Hedge Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Hedge Real 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 Hedge Real will offset losses from the drop in Hedge Real's long position.The idea behind General Motors and Hedge Real Estate 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.| Hedge Real vs. Real Estate Investment | Hedge Real vs. Trx Real Estate | Hedge Real vs. ZAVIT REAL ESTATE | Hedge Real vs. WHG REAL ESTATE |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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