Correlation Between GM and Icm Small
Can any of the company-specific risk be diversified away by investing in both GM and Icm Small 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 Icm Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Icm Small Pany, you can compare the effects of market volatilities on GM and Icm Small 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 Icm Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Icm Small.
Diversification Opportunities for GM and Icm Small
Poor diversification
The 3 months correlation between GM and Icm is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Icm Small Pany in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Icm Small Pany 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 Icm Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Icm Small Pany has no effect on the direction of GM i.e., GM and Icm Small go up and down completely randomly.
Pair Corralation between GM and Icm Small
Allowing for the 90-day total investment horizon General Motors is expected to generate 1.76 times more return on investment than Icm Small. However, GM is 1.76 times more volatile than Icm Small Pany. It trades about 0.17 of its potential returns per unit of risk. Icm Small Pany is currently generating about 0.28 per unit of risk. If you would invest 5,076 in General Motors on September 1, 2024 and sell it today you would earn a total of 483.00 from holding General Motors or generate 9.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
General Motors vs. Icm Small Pany
Performance |
| Timeline |
| General Motors |
| Icm Small Pany |
GM and Icm Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Icm Small
The main advantage of trading using opposite GM and Icm Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Icm Small 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 Icm Small will offset losses from the drop in Icm Small's long position.The idea behind General Motors and Icm Small Pany 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.| Icm Small vs. Amg Managers Montag | Icm Small vs. Europacific Growth Fund | Icm Small vs. Harbor Capital Appreciation | Icm Small vs. Crm Mid Cap |
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.
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