Correlation Between GM and Victory High
Can any of the company-specific risk be diversified away by investing in both GM and Victory High 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 Victory High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Victory High Yield, you can compare the effects of market volatilities on GM and Victory High 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 Victory High. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Victory High.
Diversification Opportunities for GM and Victory High
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GM and Victory is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Victory High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Victory High Yield 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 Victory High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Victory High Yield has no effect on the direction of GM i.e., GM and Victory High go up and down completely randomly.
Pair Corralation between GM and Victory High
Allowing for the 90-day total investment horizon General Motors is expected to generate 14.31 times more return on investment than Victory High. However, GM is 14.31 times more volatile than Victory High Yield. It trades about 0.17 of its potential returns per unit of risk. Victory High Yield is currently generating about 0.29 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 | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
General Motors vs. Victory High Yield
Performance |
| Timeline |
| General Motors |
| Victory High Yield |
GM and Victory High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Victory High
The main advantage of trading using opposite GM and Victory High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Victory High 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 Victory High will offset losses from the drop in Victory High's long position.The idea behind General Motors and Victory High Yield 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.| Victory High vs. Victory Rs International | Victory High vs. Victory High Yield | Victory High vs. Victory Sycamore Established | Victory High vs. Victory Integrity Discovery |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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