Correlation Between GM and Oklahoma Municipal
Can any of the company-specific risk be diversified away by investing in both GM and Oklahoma Municipal 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 Oklahoma Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Oklahoma Municipal Fund, you can compare the effects of market volatilities on GM and Oklahoma Municipal 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 Oklahoma Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Oklahoma Municipal.
Diversification Opportunities for GM and Oklahoma Municipal
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between GM and Oklahoma is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Oklahoma Municipal Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oklahoma Municipal 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 Oklahoma Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oklahoma Municipal has no effect on the direction of GM i.e., GM and Oklahoma Municipal go up and down completely randomly.
Pair Corralation between GM and Oklahoma Municipal
Allowing for the 90-day total investment horizon General Motors is expected to generate 8.14 times more return on investment than Oklahoma Municipal. However, GM is 8.14 times more volatile than Oklahoma Municipal Fund. It trades about 0.07 of its potential returns per unit of risk. Oklahoma Municipal Fund is currently generating about 0.05 per unit of risk. If you would invest 3,536 in General Motors on August 31, 2024 and sell it today you would earn a total of 2,023 from holding General Motors or generate 57.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.73% |
| Values | Daily Returns |
General Motors vs. Oklahoma Municipal Fund
Performance |
| Timeline |
| General Motors |
| Oklahoma Municipal |
GM and Oklahoma Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Oklahoma Municipal
The main advantage of trading using opposite GM and Oklahoma Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Oklahoma Municipal 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 Oklahoma Municipal will offset losses from the drop in Oklahoma Municipal's long position.The idea behind General Motors and Oklahoma Municipal Fund 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.| Oklahoma Municipal vs. Colorado Bondshares A | Oklahoma Municipal vs. Virginia Bond Fund | Oklahoma Municipal vs. Usaa Virginia Bond | Oklahoma Municipal vs. Virginia Bond Fund |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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