Correlation Between GM and Aim Investment
Can any of the company-specific risk be diversified away by investing in both GM and Aim Investment 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 Aim Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Aim Investment Secs, you can compare the effects of market volatilities on GM and Aim Investment 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 Aim Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Aim Investment.
Diversification Opportunities for GM and Aim Investment
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between GM and Aim is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Aim Investment Secs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aim Investment Secs 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 Aim Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aim Investment Secs has no effect on the direction of GM i.e., GM and Aim Investment go up and down completely randomly.
Pair Corralation between GM and Aim Investment
If you would invest 5,273 in General Motors on August 28, 2024 and sell it today you would earn a total of 747.00 from holding General Motors or generate 14.17% 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. Aim Investment Secs
Performance |
| Timeline |
| General Motors |
| Aim Investment Secs |
GM and Aim Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Aim Investment
The main advantage of trading using opposite GM and Aim Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Aim Investment 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 Aim Investment will offset losses from the drop in Aim Investment's long position.The idea behind General Motors and Aim Investment Secs 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.| Aim Investment vs. Dimensional Retirement Income | Aim Investment vs. Blackrock Moderate Prepared | Aim Investment vs. Pgim Conservative Retirement | Aim Investment vs. Transamerica Cleartrack Retirement |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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