Correlation Between GM and IShares AEX
Can any of the company-specific risk be diversified away by investing in both GM and IShares AEX 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 IShares AEX into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and iShares AEX UCITS, you can compare the effects of market volatilities on GM and IShares AEX 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 IShares AEX. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and IShares AEX.
Diversification Opportunities for GM and IShares AEX
-0.79 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GM and IShares is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and iShares AEX UCITS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares AEX UCITS 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 IShares AEX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares AEX UCITS has no effect on the direction of GM i.e., GM and IShares AEX go up and down completely randomly.
Pair Corralation between GM and IShares AEX
Allowing for the 90-day total investment horizon General Motors is expected to under-perform the IShares AEX. In addition to that, GM is 3.78 times more volatile than iShares AEX UCITS. It trades about -0.16 of its total potential returns per unit of risk. iShares AEX UCITS is currently generating about 0.25 per unit of volatility. If you would invest 8,643 in iShares AEX UCITS on September 13, 2024 and sell it today you would earn a total of 322.00 from holding iShares AEX UCITS or generate 3.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. iShares AEX UCITS
Performance |
| Timeline |
| General Motors |
| iShares AEX UCITS |
GM and IShares AEX Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and IShares AEX
The main advantage of trading using opposite GM and IShares AEX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, IShares AEX 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 IShares AEX will offset losses from the drop in IShares AEX's long position.The idea behind General Motors and iShares AEX UCITS 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.| IShares AEX vs. Vanguard SP 500 | IShares AEX vs. iShares II Public | IShares AEX vs. Vanguard FTSE All World | IShares AEX vs. iShares SP 500 |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
Other Complementary Tools
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| CEOs Directory Screen CEOs from public companies around the world |