Correlation Between GM and Mainstay California
Can any of the company-specific risk be diversified away by investing in both GM and Mainstay California 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 Mainstay California into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Mainstay California Tax, you can compare the effects of market volatilities on GM and Mainstay California 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 Mainstay California. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Mainstay California.
Diversification Opportunities for GM and Mainstay California
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GM and Mainstay is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Mainstay California Tax in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mainstay California Tax 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 Mainstay California. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mainstay California Tax has no effect on the direction of GM i.e., GM and Mainstay California go up and down completely randomly.
Pair Corralation between GM and Mainstay California
Allowing for the 90-day total investment horizon General Motors is expected to generate 8.16 times more return on investment than Mainstay California. However, GM is 8.16 times more volatile than Mainstay California Tax. It trades about 0.07 of its potential returns per unit of risk. Mainstay California Tax is currently generating about 0.09 per unit of risk. If you would invest 3,617 in General Motors on September 2, 2024 and sell it today you would earn a total of 1,942 from holding General Motors or generate 53.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Mainstay California Tax
Performance |
| Timeline |
| General Motors |
| Mainstay California Tax |
GM and Mainstay California Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Mainstay California
The main advantage of trading using opposite GM and Mainstay California positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Mainstay California 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 Mainstay California will offset losses from the drop in Mainstay California's long position.The idea behind General Motors and Mainstay California Tax 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.| Mainstay California vs. Old Westbury Large | Mainstay California vs. T Rowe Price | Mainstay California vs. T Rowe Price | Mainstay California vs. Aqr Large Cap |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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