Correlation Between GM and 21Shares Bitwise
Can any of the company-specific risk be diversified away by investing in both GM and 21Shares Bitwise 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 21Shares Bitwise into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and 21Shares Bitwise Select, you can compare the effects of market volatilities on GM and 21Shares Bitwise 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 21Shares Bitwise. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and 21Shares Bitwise.
Diversification Opportunities for GM and 21Shares Bitwise
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GM and 21Shares is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and 21Shares Bitwise Select in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 21Shares Bitwise Select 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 21Shares Bitwise. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 21Shares Bitwise Select has no effect on the direction of GM i.e., GM and 21Shares Bitwise go up and down completely randomly.
Pair Corralation between GM and 21Shares Bitwise
Allowing for the 90-day total investment horizon General Motors is expected to under-perform the 21Shares Bitwise. But the stock apears to be less risky and, when comparing its historical volatility, General Motors is 1.32 times less risky than 21Shares Bitwise. The stock trades about -0.09 of its potential returns per unit of risk. The 21Shares Bitwise Select is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 3,334 in 21Shares Bitwise Select on November 9, 2024 and sell it today you would lose (32.00) from holding 21Shares Bitwise Select or give up 0.96% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 90.91% |
| Values | Daily Returns |
General Motors vs. 21Shares Bitwise Select
Performance |
| Timeline |
| General Motors |
| 21Shares Bitwise Select |
GM and 21Shares Bitwise Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and 21Shares Bitwise
The main advantage of trading using opposite GM and 21Shares Bitwise positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, 21Shares Bitwise 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 21Shares Bitwise will offset losses from the drop in 21Shares Bitwise's long position.The idea behind General Motors and 21Shares Bitwise Select 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.| 21Shares Bitwise vs. 21Shares Polygon ETP | 21Shares Bitwise vs. 21Shares Ethereum Core | 21Shares Bitwise vs. 21Shares Tezos staking | 21Shares Bitwise vs. 21Shares Bitcoin ETP |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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