Correlation Between GM and KCAP Financial
Can any of the company-specific risk be diversified away by investing in both GM and KCAP Financial 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 KCAP Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and KCAP Financial SR, you can compare the effects of market volatilities on GM and KCAP Financial 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 KCAP Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and KCAP Financial.
Diversification Opportunities for GM and KCAP Financial
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GM and KCAP is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and KCAP Financial SR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KCAP Financial SR 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 KCAP Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KCAP Financial SR has no effect on the direction of GM i.e., GM and KCAP Financial go up and down completely randomly.
Pair Corralation between GM and KCAP Financial
If you would invest (100.00) in KCAP Financial SR on September 13, 2024 and sell it today you would earn a total of 100.00 from holding KCAP Financial SR or generate -100.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
General Motors vs. KCAP Financial SR
Performance |
| Timeline |
| General Motors |
| KCAP Financial SR |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
GM and KCAP Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and KCAP Financial
The main advantage of trading using opposite GM and KCAP Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, KCAP Financial 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 KCAP Financial will offset losses from the drop in KCAP Financial's long position.The idea behind General Motors and KCAP Financial SR 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.| KCAP Financial vs. Mativ Holdings | KCAP Financial vs. Keurig Dr Pepper | KCAP Financial vs. Hudson Technologies | KCAP Financial vs. Air Products and |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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