Correlation Between GM and Ladenburg Income
Can any of the company-specific risk be diversified away by investing in both GM and Ladenburg Income 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 Ladenburg Income into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Ladenburg Income Growth, you can compare the effects of market volatilities on GM and Ladenburg Income 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 Ladenburg Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Ladenburg Income.
Diversification Opportunities for GM and Ladenburg Income
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between GM and Ladenburg is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Ladenburg Income Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ladenburg Income Growth 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 Ladenburg Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ladenburg Income Growth has no effect on the direction of GM i.e., GM and Ladenburg Income go up and down completely randomly.
Pair Corralation between GM and Ladenburg Income
Allowing for the 90-day total investment horizon General Motors is expected to under-perform the Ladenburg Income. In addition to that, GM is 6.88 times more volatile than Ladenburg Income Growth. It trades about -0.04 of its total potential returns per unit of risk. Ladenburg Income Growth is currently generating about 0.22 per unit of volatility. If you would invest 1,190 in Ladenburg Income Growth on November 2, 2024 and sell it today you would earn a total of 22.00 from holding Ladenburg Income Growth or generate 1.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Ladenburg Income Growth
Performance |
| Timeline |
| General Motors |
| Ladenburg Income Growth |
GM and Ladenburg Income Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Ladenburg Income
The main advantage of trading using opposite GM and Ladenburg Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Ladenburg Income 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 Ladenburg Income will offset losses from the drop in Ladenburg Income's long position.The idea behind General Motors and Ladenburg Income Growth 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.| Ladenburg Income vs. Doubleline Total Return | Ladenburg Income vs. Morningstar Defensive Bond | Ladenburg Income vs. Ab Bond Inflation | Ladenburg Income vs. Blrc Sgy Mnp |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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