Correlation Between GM and Pioneer Fund
Can any of the company-specific risk be diversified away by investing in both GM and Pioneer Fund 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 Pioneer Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Pioneer Fund Pioneer, you can compare the effects of market volatilities on GM and Pioneer Fund 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 Pioneer Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Pioneer Fund.
Diversification Opportunities for GM and Pioneer Fund
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GM and Pioneer is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Pioneer Fund Pioneer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pioneer Fund Pioneer 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 Pioneer Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pioneer Fund Pioneer has no effect on the direction of GM i.e., GM and Pioneer Fund go up and down completely randomly.
Pair Corralation between GM and Pioneer Fund
Allowing for the 90-day total investment horizon General Motors is expected to generate 2.19 times more return on investment than Pioneer Fund. However, GM is 2.19 times more volatile than Pioneer Fund Pioneer. It trades about 0.12 of its potential returns per unit of risk. Pioneer Fund Pioneer is currently generating about 0.08 per unit of risk. If you would invest 4,287 in General Motors on August 26, 2024 and sell it today you would earn a total of 1,566 from holding General Motors or generate 36.53% 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. Pioneer Fund Pioneer
Performance |
| Timeline |
| General Motors |
| Pioneer Fund Pioneer |
GM and Pioneer Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Pioneer Fund
The main advantage of trading using opposite GM and Pioneer Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Pioneer Fund 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 Pioneer Fund will offset losses from the drop in Pioneer Fund's long position.The idea behind General Motors and Pioneer Fund Pioneer 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.| Pioneer Fund vs. Goldman Sachs Financial | Pioneer Fund vs. Angel Oak Financial | Pioneer Fund vs. 1919 Financial Services | Pioneer Fund vs. Gabelli Global Financial |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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