Correlation Between GM and Russell Australian
Can any of the company-specific risk be diversified away by investing in both GM and Russell Australian 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 Russell Australian into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Russell Australian Select, you can compare the effects of market volatilities on GM and Russell Australian 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 Russell Australian. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Russell Australian.
Diversification Opportunities for GM and Russell Australian
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between GM and Russell is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Russell Australian Select in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Russell Australian Select 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 Russell Australian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Russell Australian Select has no effect on the direction of GM i.e., GM and Russell Australian go up and down completely randomly.
Pair Corralation between GM and Russell Australian
Allowing for the 90-day total investment horizon General Motors is expected to generate 9.91 times more return on investment than Russell Australian. However, GM is 9.91 times more volatile than Russell Australian Select. It trades about 0.14 of its potential returns per unit of risk. Russell Australian Select is currently generating about 0.07 per unit of risk. If you would invest 5,180 in General Motors on September 3, 2024 and sell it today you would earn a total of 379.00 from holding General Motors or generate 7.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
General Motors vs. Russell Australian Select
Performance |
| Timeline |
| General Motors |
| Russell Australian Select |
GM and Russell Australian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Russell Australian
The main advantage of trading using opposite GM and Russell Australian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Russell Australian 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 Russell Australian will offset losses from the drop in Russell Australian's long position.The idea behind General Motors and Russell Australian Select 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.| Russell Australian vs. BetaShares Global Government | Russell Australian vs. BetaShares Geared Australian | Russell Australian vs. Global X Semiconductor | Russell Australian vs. iShares UBS Government |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
Other Complementary Tools
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios |