Correlation Between GM and AdvisorShares
Can any of the company-specific risk be diversified away by investing in both GM and AdvisorShares 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 AdvisorShares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and AdvisorShares, you can compare the effects of market volatilities on GM and AdvisorShares 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 AdvisorShares. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and AdvisorShares.
Diversification Opportunities for GM and AdvisorShares
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GM and AdvisorShares is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and AdvisorShares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AdvisorShares 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 AdvisorShares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AdvisorShares has no effect on the direction of GM i.e., GM and AdvisorShares go up and down completely randomly.
Pair Corralation between GM and AdvisorShares
If you would invest 5,076 in General Motors on September 1, 2024 and sell it today you would earn a total of 483.00 from holding General Motors or generate 9.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
General Motors vs. AdvisorShares
Performance |
| Timeline |
| General Motors |
| AdvisorShares |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
GM and AdvisorShares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and AdvisorShares
The main advantage of trading using opposite GM and AdvisorShares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, AdvisorShares 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 AdvisorShares will offset losses from the drop in AdvisorShares' long position.The idea behind General Motors and AdvisorShares 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.| AdvisorShares vs. Vanguard Total Stock | AdvisorShares vs. SPDR SP 500 | AdvisorShares vs. iShares Core SP | AdvisorShares vs. Vanguard Total Bond |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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