Correlation Between GM and Columbia Amt
Can any of the company-specific risk be diversified away by investing in both GM and Columbia Amt 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 Columbia Amt into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Columbia Amt Free New, you can compare the effects of market volatilities on GM and Columbia Amt 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 Columbia Amt. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Columbia Amt.
Diversification Opportunities for GM and Columbia Amt
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between GM and Columbia is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Columbia Amt Free New in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Amt Free 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 Columbia Amt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Amt Free has no effect on the direction of GM i.e., GM and Columbia Amt go up and down completely randomly.
Pair Corralation between GM and Columbia Amt
Allowing for the 90-day total investment horizon General Motors is expected to generate 13.62 times more return on investment than Columbia Amt. However, GM is 13.62 times more volatile than Columbia Amt Free New. It trades about 0.05 of its potential returns per unit of risk. Columbia Amt Free New is currently generating about 0.07 per unit of risk. If you would invest 3,805 in General Motors on September 3, 2024 and sell it today you would earn a total of 1,754 from holding General Motors or generate 46.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Columbia Amt Free New
Performance |
| Timeline |
| General Motors |
| Columbia Amt Free |
GM and Columbia Amt Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Columbia Amt
The main advantage of trading using opposite GM and Columbia Amt positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Columbia Amt 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 Columbia Amt will offset losses from the drop in Columbia Amt's long position.The idea behind General Motors and Columbia Amt Free New 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.| Columbia Amt vs. Goldman Sachs Growth | Columbia Amt vs. Nationwide Growth Fund | Columbia Amt vs. Mid Cap Growth | Columbia Amt vs. Tfa Alphagen Growth |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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