Correlation Between GM and IShares JP
Can any of the company-specific risk be diversified away by investing in both GM and IShares JP 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 JP 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 JP Morgan, you can compare the effects of market volatilities on GM and IShares JP 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 JP. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and IShares JP.
Diversification Opportunities for GM and IShares JP
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GM and IShares is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and iShares JP Morgan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares JP Morgan 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 JP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares JP Morgan has no effect on the direction of GM i.e., GM and IShares JP go up and down completely randomly.
Pair Corralation between GM and IShares JP
Allowing for the 90-day total investment horizon General Motors is expected to generate 4.17 times more return on investment than IShares JP. However, GM is 4.17 times more volatile than iShares JP Morgan. It trades about 0.04 of its potential returns per unit of risk. iShares JP Morgan is currently generating about 0.06 per unit of risk. If you would invest 3,507 in General Motors on November 27, 2024 and sell it today you would earn a total of 1,150 from holding General Motors or generate 32.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 98.09% |
| Values | Daily Returns |
General Motors vs. iShares JP Morgan
Performance |
| Timeline |
| General Motors |
| iShares JP Morgan |
GM and IShares JP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and IShares JP
The main advantage of trading using opposite GM and IShares JP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, IShares JP 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 JP will offset losses from the drop in IShares JP's long position.The idea behind General Motors and iShares JP Morgan 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 JP vs. UBSFund Solutions MSCI | IShares JP vs. Vanguard SP 500 | IShares JP vs. iShares VII PLC | IShares JP vs. iShares Core SP |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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