Correlation Between GM and Invesco Canadian
Can any of the company-specific risk be diversified away by investing in both GM and Invesco Canadian 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 Invesco Canadian into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Invesco Canadian Dividend, you can compare the effects of market volatilities on GM and Invesco Canadian 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 Invesco Canadian. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Invesco Canadian.
Diversification Opportunities for GM and Invesco Canadian
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GM and Invesco is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Invesco Canadian Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Canadian Dividend 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 Invesco Canadian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Canadian Dividend has no effect on the direction of GM i.e., GM and Invesco Canadian go up and down completely randomly.
Pair Corralation between GM and Invesco Canadian
Allowing for the 90-day total investment horizon General Motors is expected to generate 5.28 times more return on investment than Invesco Canadian. However, GM is 5.28 times more volatile than Invesco Canadian Dividend. It trades about 0.14 of its potential returns per unit of risk. Invesco Canadian Dividend is currently generating about 0.34 per unit of risk. If you would invest 4,863 in General Motors on August 25, 2024 and sell it today you would earn a total of 990.00 from holding General Motors or generate 20.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Invesco Canadian Dividend
Performance |
| Timeline |
| General Motors |
| Invesco Canadian Dividend |
GM and Invesco Canadian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Invesco Canadian
The main advantage of trading using opposite GM and Invesco Canadian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Invesco Canadian 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 Invesco Canadian will offset losses from the drop in Invesco Canadian's long position.The idea behind General Motors and Invesco Canadian Dividend 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.| Invesco Canadian vs. Invesco SP International | Invesco Canadian vs. Invesco FTSE RAFI | Invesco Canadian vs. Invesco ESG NASDAQ | Invesco Canadian vs. Invesco SP International |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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