Correlation Between GM and PRS Reit
Can any of the company-specific risk be diversified away by investing in both GM and PRS Reit 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 PRS Reit into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and PRS Reit PLC, you can compare the effects of market volatilities on GM and PRS Reit 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 PRS Reit. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and PRS Reit.
Diversification Opportunities for GM and PRS Reit
Pay attention - limited upside
The 3 months correlation between GM and PRS is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and PRS Reit PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PRS Reit PLC 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 PRS Reit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PRS Reit PLC has no effect on the direction of GM i.e., GM and PRS Reit go up and down completely randomly.
Pair Corralation between GM and PRS Reit
Allowing for the 90-day total investment horizon General Motors is expected to under-perform the PRS Reit. In addition to that, GM is 2.17 times more volatile than PRS Reit PLC. It trades about -0.22 of its total potential returns per unit of risk. PRS Reit PLC is currently generating about 0.23 per unit of volatility. If you would invest 10,680 in PRS Reit PLC on November 28, 2024 and sell it today you would earn a total of 620.00 from holding PRS Reit PLC or generate 5.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. PRS Reit PLC
Performance |
| Timeline |
| General Motors |
| PRS Reit PLC |
GM and PRS Reit Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and PRS Reit
The main advantage of trading using opposite GM and PRS Reit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, PRS Reit 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 PRS Reit will offset losses from the drop in PRS Reit's long position.The idea behind General Motors and PRS Reit PLC 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.| PRS Reit vs. BlackRock Frontiers Investment | PRS Reit vs. Smithson Investment Trust | PRS Reit vs. GreenX Metals | PRS Reit vs. OneSavings Bank PLC |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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