Correlation Between GM and Rbc China
Can any of the company-specific risk be diversified away by investing in both GM and Rbc China 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 Rbc China into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Rbc China Equity, you can compare the effects of market volatilities on GM and Rbc China 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 Rbc China. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Rbc China.
Diversification Opportunities for GM and Rbc China
Significant diversification
The 3 months correlation between GM and Rbc is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Rbc China Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rbc China Equity 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 Rbc China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rbc China Equity has no effect on the direction of GM i.e., GM and Rbc China go up and down completely randomly.
Pair Corralation between GM and Rbc China
Allowing for the 90-day total investment horizon General Motors is expected to generate 1.36 times more return on investment than Rbc China. However, GM is 1.36 times more volatile than Rbc China Equity. It trades about 0.05 of its potential returns per unit of risk. Rbc China Equity is currently generating about 0.0 per unit of risk. If you would invest 3,757 in General Motors on August 30, 2024 and sell it today you would earn a total of 1,793 from holding General Motors or generate 47.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
General Motors vs. Rbc China Equity
Performance |
| Timeline |
| General Motors |
| Rbc China Equity |
GM and Rbc China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Rbc China
The main advantage of trading using opposite GM and Rbc China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Rbc China 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 Rbc China will offset losses from the drop in Rbc China's long position.The idea behind General Motors and Rbc China Equity 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.| Rbc China vs. Fisher Fixed Income | Rbc China vs. Ms Global Fixed | Rbc China vs. Touchstone International Equity | Rbc China vs. Gmo Global Equity |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
Other Complementary Tools
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Global Correlations Find global opportunities by holding instruments from different markets |