Correlation Between GM and PeakShares Sector
Can any of the company-specific risk be diversified away by investing in both GM and PeakShares Sector 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 PeakShares Sector into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and PeakShares Sector Rotation, you can compare the effects of market volatilities on GM and PeakShares Sector 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 PeakShares Sector. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and PeakShares Sector.
Diversification Opportunities for GM and PeakShares Sector
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GM and PeakShares is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and PeakShares Sector Rotation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PeakShares Sector 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 PeakShares Sector. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PeakShares Sector has no effect on the direction of GM i.e., GM and PeakShares Sector go up and down completely randomly.
Pair Corralation between GM and PeakShares Sector
Allowing for the 90-day total investment horizon General Motors is expected to generate 3.04 times more return on investment than PeakShares Sector. However, GM is 3.04 times more volatile than PeakShares Sector Rotation. It trades about 0.17 of its potential returns per unit of risk. PeakShares Sector Rotation is currently generating about 0.23 per unit of risk. If you would invest 5,076 in General Motors on September 1, 2024 and sell it today you would earn a total of 483.00 from holding General Motors or generate 9.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
General Motors vs. PeakShares Sector Rotation
Performance |
| Timeline |
| General Motors |
| PeakShares Sector |
GM and PeakShares Sector Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and PeakShares Sector
The main advantage of trading using opposite GM and PeakShares Sector positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, PeakShares Sector 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 PeakShares Sector will offset losses from the drop in PeakShares Sector's long position.The idea behind General Motors and PeakShares Sector Rotation 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.| PeakShares Sector vs. Global X SP | PeakShares Sector vs. Amplify CWP Enhanced | PeakShares Sector vs. JPMorgan Equity Premium |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
Other Complementary Tools
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device |