Correlation Between GM and Spectrum Advisors
Can any of the company-specific risk be diversified away by investing in both GM and Spectrum Advisors 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 Spectrum Advisors into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Spectrum Advisors Preferred, you can compare the effects of market volatilities on GM and Spectrum Advisors 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 Spectrum Advisors. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Spectrum Advisors.
Diversification Opportunities for GM and Spectrum Advisors
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between GM and Spectrum is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Spectrum Advisors Preferred in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spectrum Advisors 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 Spectrum Advisors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spectrum Advisors has no effect on the direction of GM i.e., GM and Spectrum Advisors go up and down completely randomly.
Pair Corralation between GM and Spectrum Advisors
Allowing for the 90-day total investment horizon General Motors is expected to generate 2.1 times more return on investment than Spectrum Advisors. However, GM is 2.1 times more volatile than Spectrum Advisors Preferred. It trades about 0.14 of its potential returns per unit of risk. Spectrum Advisors Preferred is currently generating about 0.07 per unit of risk. If you would invest 3,135 in General Motors on August 26, 2024 and sell it today you would earn a total of 2,718 from holding General Motors or generate 86.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Spectrum Advisors Preferred
Performance |
| Timeline |
| General Motors |
| Spectrum Advisors |
GM and Spectrum Advisors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Spectrum Advisors
The main advantage of trading using opposite GM and Spectrum Advisors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Spectrum Advisors 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 Spectrum Advisors will offset losses from the drop in Spectrum Advisors' long position.The idea behind General Motors and Spectrum Advisors Preferred 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.| Spectrum Advisors vs. Eagle Mlp Strategy | Spectrum Advisors vs. Western Assets Emerging | Spectrum Advisors vs. Investec Emerging Markets | Spectrum Advisors vs. Pnc Emerging Markets |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
Other Complementary Tools
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device |