Correlation Between GM and Voya Intermediate
Can any of the company-specific risk be diversified away by investing in both GM and Voya Intermediate 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 Voya Intermediate into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Voya Intermediate Bond, you can compare the effects of market volatilities on GM and Voya Intermediate 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 Voya Intermediate. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Voya Intermediate.
Diversification Opportunities for GM and Voya Intermediate
-0.84 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GM and Voya is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Voya Intermediate Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voya Intermediate Bond 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 Voya Intermediate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voya Intermediate Bond has no effect on the direction of GM i.e., GM and Voya Intermediate go up and down completely randomly.
Pair Corralation between GM and Voya Intermediate
Allowing for the 90-day total investment horizon General Motors is expected to generate 5.66 times more return on investment than Voya Intermediate. However, GM is 5.66 times more volatile than Voya Intermediate Bond. It trades about 0.13 of its potential returns per unit of risk. Voya Intermediate Bond is currently generating about 0.1 per unit of risk. If you would invest 2,879 in General Motors on September 1, 2024 and sell it today you would earn a total of 2,680 from holding General Motors or generate 93.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 99.63% |
| Values | Daily Returns |
General Motors vs. Voya Intermediate Bond
Performance |
| Timeline |
| General Motors |
| Voya Intermediate Bond |
GM and Voya Intermediate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Voya Intermediate
The main advantage of trading using opposite GM and Voya Intermediate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Voya Intermediate 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 Voya Intermediate will offset losses from the drop in Voya Intermediate's long position.The idea behind General Motors and Voya Intermediate Bond 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.| Voya Intermediate vs. Sp Midcap Index | Voya Intermediate vs. Shelton Emerging Markets | Voya Intermediate vs. Locorr Market Trend | Voya Intermediate vs. Siit Emerging Markets |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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