Correlation Between GM and Lsv Conservative
Can any of the company-specific risk be diversified away by investing in both GM and Lsv Conservative 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 Lsv Conservative into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Lsv Servative Value, you can compare the effects of market volatilities on GM and Lsv Conservative 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 Lsv Conservative. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Lsv Conservative.
Diversification Opportunities for GM and Lsv Conservative
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GM and Lsv is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Lsv Servative Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lsv Servative Value 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 Lsv Conservative. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lsv Servative Value has no effect on the direction of GM i.e., GM and Lsv Conservative go up and down completely randomly.
Pair Corralation between GM and Lsv Conservative
Allowing for the 90-day total investment horizon General Motors is expected to generate 2.88 times more return on investment than Lsv Conservative. However, GM is 2.88 times more volatile than Lsv Servative Value. It trades about 0.12 of its potential returns per unit of risk. Lsv Servative Value is currently generating about 0.28 per unit of risk. If you would invest 5,197 in General Motors on August 31, 2024 and sell it today you would earn a total of 353.00 from holding General Motors or generate 6.79% 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. Lsv Servative Value
Performance |
| Timeline |
| General Motors |
| Lsv Servative Value |
GM and Lsv Conservative Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Lsv Conservative
The main advantage of trading using opposite GM and Lsv Conservative positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Lsv Conservative 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 Lsv Conservative will offset losses from the drop in Lsv Conservative's long position.The idea behind General Motors and Lsv Servative Value 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.| Lsv Conservative vs. Icon Financial Fund | Lsv Conservative vs. Prudential Jennison Financial | Lsv Conservative vs. Angel Oak Financial | Lsv Conservative vs. 1919 Financial Services |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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