Correlation Between GM and Mainstay Retirement
Can any of the company-specific risk be diversified away by investing in both GM and Mainstay Retirement 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 Retirement 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 Retirement 2040, you can compare the effects of market volatilities on GM and Mainstay Retirement 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 Retirement. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Mainstay Retirement.
Diversification Opportunities for GM and Mainstay Retirement
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GM and Mainstay is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Mainstay Retirement 2040 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mainstay Retirement 2040 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 Retirement. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mainstay Retirement 2040 has no effect on the direction of GM i.e., GM and Mainstay Retirement go up and down completely randomly.
Pair Corralation between GM and Mainstay Retirement
If you would invest 4,483 in General Motors on September 3, 2024 and sell it today you would earn a total of 1,076 from holding General Motors or generate 24.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
General Motors vs. Mainstay Retirement 2040
Performance |
| Timeline |
| General Motors |
| Mainstay Retirement 2040 |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
GM and Mainstay Retirement Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Mainstay Retirement
The main advantage of trading using opposite GM and Mainstay Retirement positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Mainstay Retirement 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 Retirement will offset losses from the drop in Mainstay Retirement's long position.The idea behind General Motors and Mainstay Retirement 2040 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.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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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