Correlation Between GM and SPDR Bloomberg
Can any of the company-specific risk be diversified away by investing in both GM and SPDR Bloomberg 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 SPDR Bloomberg into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and SPDR Bloomberg International, you can compare the effects of market volatilities on GM and SPDR Bloomberg 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 SPDR Bloomberg. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and SPDR Bloomberg.
Diversification Opportunities for GM and SPDR Bloomberg
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GM and SPDR is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and SPDR Bloomberg International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Bloomberg Inter 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 SPDR Bloomberg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Bloomberg Inter has no effect on the direction of GM i.e., GM and SPDR Bloomberg go up and down completely randomly.
Pair Corralation between GM and SPDR Bloomberg
Allowing for the 90-day total investment horizon General Motors is expected to generate 5.64 times more return on investment than SPDR Bloomberg. However, GM is 5.64 times more volatile than SPDR Bloomberg International. It trades about 0.06 of its potential returns per unit of risk. SPDR Bloomberg International is currently generating about 0.33 per unit of risk. If you would invest 4,511 in General Motors on January 3, 2025 and sell it today you would earn a total of 144.00 from holding General Motors or generate 3.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. SPDR Bloomberg International
Performance |
| Timeline |
| General Motors |
| SPDR Bloomberg Inter |
GM and SPDR Bloomberg Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and SPDR Bloomberg
The main advantage of trading using opposite GM and SPDR Bloomberg positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, SPDR Bloomberg 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 SPDR Bloomberg will offset losses from the drop in SPDR Bloomberg's long position.The idea behind General Motors and SPDR Bloomberg International 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.| SPDR Bloomberg vs. SPDR Bloomberg Short | SPDR Bloomberg vs. Invesco International Corporate | SPDR Bloomberg vs. SPDR Bloomberg Emerging | SPDR Bloomberg vs. SPDR Nuveen Bloomberg |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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