Correlation Between GM and Vy Umbia
Can any of the company-specific risk be diversified away by investing in both GM and Vy Umbia 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 Vy Umbia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Vy Umbia Small, you can compare the effects of market volatilities on GM and Vy Umbia 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 Vy Umbia. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Vy Umbia.
Diversification Opportunities for GM and Vy Umbia
Very poor diversification
The 3 months correlation between GM and ICVPX is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Vy Umbia Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vy Umbia Small 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 Vy Umbia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vy Umbia Small has no effect on the direction of GM i.e., GM and Vy Umbia go up and down completely randomly.
Pair Corralation between GM and Vy Umbia
Allowing for the 90-day total investment horizon General Motors is expected to under-perform the Vy Umbia. In addition to that, GM is 3.16 times more volatile than Vy Umbia Small. It trades about -0.15 of its total potential returns per unit of risk. Vy Umbia Small is currently generating about -0.1 per unit of volatility. If you would invest 1,725 in Vy Umbia Small on September 12, 2024 and sell it today you would lose (30.00) from holding Vy Umbia Small or give up 1.74% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Vy Umbia Small
Performance |
| Timeline |
| General Motors |
| Vy Umbia Small |
GM and Vy Umbia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Vy Umbia
The main advantage of trading using opposite GM and Vy Umbia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Vy Umbia 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 Vy Umbia will offset losses from the drop in Vy Umbia's long position.The idea behind General Motors and Vy Umbia Small 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.| Vy Umbia vs. Loomis Sayles Inflation | Vy Umbia vs. American Funds Inflation | Vy Umbia vs. Ab Bond Inflation | Vy Umbia vs. Federated Hermes Inflation |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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