Correlation Between GM and Predex Funds
Can any of the company-specific risk be diversified away by investing in both GM and Predex Funds 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 Predex Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Predex Funds, you can compare the effects of market volatilities on GM and Predex Funds 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 Predex Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Predex Funds.
Diversification Opportunities for GM and Predex Funds
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GM and Predex is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Predex Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Predex Funds 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 Predex Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Predex Funds has no effect on the direction of GM i.e., GM and Predex Funds go up and down completely randomly.
Pair Corralation between GM and Predex Funds
Allowing for the 90-day total investment horizon General Motors is expected to generate 17.01 times more return on investment than Predex Funds. However, GM is 17.01 times more volatile than Predex Funds. It trades about 0.08 of its potential returns per unit of risk. Predex Funds is currently generating about -0.17 per unit of risk. If you would invest 3,576 in General Motors on September 20, 2024 and sell it today you would earn a total of 1,539 from holding General Motors or generate 43.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
General Motors vs. Predex Funds
Performance |
| Timeline |
| General Motors |
| Predex Funds |
GM and Predex Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Predex Funds
The main advantage of trading using opposite GM and Predex Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Predex Funds 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 Predex Funds will offset losses from the drop in Predex Funds' long position.The idea behind General Motors and Predex Funds 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.| Predex Funds vs. Ab Global Bond | Predex Funds vs. 361 Global Longshort | Predex Funds vs. Barings Global Floating | Predex Funds vs. Ab Global Risk |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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