Correlation Between GM and ALPS REIT
Can any of the company-specific risk be diversified away by investing in both GM and ALPS REIT 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 ALPS REIT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and ALPS REIT Dividend, you can compare the effects of market volatilities on GM and ALPS REIT 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 ALPS REIT. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and ALPS REIT.
Diversification Opportunities for GM and ALPS REIT
Very good diversification
The 3 months correlation between GM and ALPS is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and ALPS REIT Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALPS REIT Dividend 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 ALPS REIT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALPS REIT Dividend has no effect on the direction of GM i.e., GM and ALPS REIT go up and down completely randomly.
Pair Corralation between GM and ALPS REIT
Allowing for the 90-day total investment horizon General Motors is expected to generate 1.6 times more return on investment than ALPS REIT. However, GM is 1.6 times more volatile than ALPS REIT Dividend. It trades about 0.05 of its potential returns per unit of risk. ALPS REIT Dividend is currently generating about 0.03 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 Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. ALPS REIT Dividend
Performance |
| Timeline |
| General Motors |
| ALPS REIT Dividend |
GM and ALPS REIT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and ALPS REIT
The main advantage of trading using opposite GM and ALPS REIT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, ALPS REIT 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 ALPS REIT will offset losses from the drop in ALPS REIT's long position.The idea behind General Motors and ALPS REIT Dividend 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.| ALPS REIT vs. iShares Core REIT | ALPS REIT vs. JPMorgan BetaBuilders International | ALPS REIT vs. Invesco Active Real |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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