Correlation Between GM and Retirement Choices
Can any of the company-specific risk be diversified away by investing in both GM and Retirement Choices 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 Retirement Choices into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Retirement Choices At, you can compare the effects of market volatilities on GM and Retirement Choices 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 Retirement Choices. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Retirement Choices.
Diversification Opportunities for GM and Retirement Choices
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GM and Retirement is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Retirement Choices At in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Retirement Choices 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 Retirement Choices. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Retirement Choices has no effect on the direction of GM i.e., GM and Retirement Choices go up and down completely randomly.
Pair Corralation between GM and Retirement Choices
If you would invest 3,324 in General Motors on September 2, 2024 and sell it today you would earn a total of 2,235 from holding General Motors or generate 67.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 0.4% |
| Values | Daily Returns |
General Motors vs. Retirement Choices At
Performance |
| Timeline |
| General Motors |
| Retirement Choices |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
GM and Retirement Choices Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Retirement Choices
The main advantage of trading using opposite GM and Retirement Choices positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Retirement Choices 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 Retirement Choices will offset losses from the drop in Retirement Choices' long position.The idea behind General Motors and Retirement Choices At 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.| Retirement Choices vs. Enhanced Large Pany | Retirement Choices vs. Morningstar Unconstrained Allocation | Retirement Choices vs. Goldman Sachs Large | Retirement Choices vs. T Rowe Price |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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