Correlation Between GM and IQ Large
Can any of the company-specific risk be diversified away by investing in both GM and IQ Large 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 IQ Large into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and IQ Large Cap, you can compare the effects of market volatilities on GM and IQ Large 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 IQ Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and IQ Large.
Diversification Opportunities for GM and IQ Large
Poor diversification
The 3 months correlation between GM and LRND is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and IQ Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IQ Large Cap 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 IQ Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IQ Large Cap has no effect on the direction of GM i.e., GM and IQ Large go up and down completely randomly.
Pair Corralation between GM and IQ Large
Allowing for the 90-day total investment horizon GM is expected to generate 1.09 times less return on investment than IQ Large. In addition to that, GM is 2.13 times more volatile than IQ Large Cap. It trades about 0.05 of its total potential returns per unit of risk. IQ Large Cap is currently generating about 0.11 per unit of volatility. If you would invest 2,023 in IQ Large Cap on August 30, 2024 and sell it today you would earn a total of 1,385 from holding IQ Large Cap or generate 68.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. IQ Large Cap
Performance |
| Timeline |
| General Motors |
| IQ Large Cap |
GM and IQ Large Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and IQ Large
The main advantage of trading using opposite GM and IQ Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, IQ Large 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 IQ Large will offset losses from the drop in IQ Large's long position.The idea behind General Motors and IQ Large Cap 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.| IQ Large vs. FT Vest Equity | IQ Large vs. Northern Lights | IQ Large vs. Dimensional International High | IQ Large vs. First Trust Exchange Traded |
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.
Other Complementary Tools
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. |