Correlation Between GM and Queens Road
Can any of the company-specific risk be diversified away by investing in both GM and Queens Road 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 Queens Road into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Queens Road Capital, you can compare the effects of market volatilities on GM and Queens Road 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 Queens Road. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Queens Road.
Diversification Opportunities for GM and Queens Road
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between GM and Queens is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Queens Road Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Queens Road Capital 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 Queens Road. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Queens Road Capital has no effect on the direction of GM i.e., GM and Queens Road go up and down completely randomly.
Pair Corralation between GM and Queens Road
Allowing for the 90-day total investment horizon General Motors is expected to generate 1.33 times more return on investment than Queens Road. However, GM is 1.33 times more volatile than Queens Road Capital. It trades about 0.17 of its potential returns per unit of risk. Queens Road Capital is currently generating about 0.04 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 | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
General Motors vs. Queens Road Capital
Performance |
| Timeline |
| General Motors |
| Queens Road Capital |
GM and Queens Road Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Queens Road
The main advantage of trading using opposite GM and Queens Road positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Queens Road 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 Queens Road will offset losses from the drop in Queens Road's long position.The idea behind General Motors and Queens Road Capital 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.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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
Other Complementary Tools
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine |