Correlation Between GM and Great West
Can any of the company-specific risk be diversified away by investing in both GM and Great West 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 Great West into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Great West Securefoundation Balanced, you can compare the effects of market volatilities on GM and Great West 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 Great West. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Great West.
Diversification Opportunities for GM and Great West
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between GM and Great is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Great West Securefoundation Ba in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great West Securefou 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 Great West. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great West Securefou has no effect on the direction of GM i.e., GM and Great West go up and down completely randomly.
Pair Corralation between GM and Great West
Allowing for the 90-day total investment horizon General Motors is expected to under-perform the Great West. In addition to that, GM is 2.61 times more volatile than Great West Securefoundation Balanced. It trades about -0.06 of its total potential returns per unit of risk. Great West Securefoundation Balanced is currently generating about 0.08 per unit of volatility. If you would invest 1,053 in Great West Securefoundation Balanced on November 4, 2024 and sell it today you would earn a total of 18.00 from holding Great West Securefoundation Balanced or generate 1.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Great West Securefoundation Ba
Performance |
| Timeline |
| General Motors |
| Great West Securefou |
GM and Great West Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Great West
The main advantage of trading using opposite GM and Great West positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Great West 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 Great West will offset losses from the drop in Great West's long position.The idea behind General Motors and Great West Securefoundation Balanced 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.| Great West vs. Touchstone Ultra Short | Great West vs. Multisector Bond Sma | Great West vs. Ambrus Core Bond | Great West vs. Versatile Bond Portfolio |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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