Correlation Between GM and Carillon Reams
Can any of the company-specific risk be diversified away by investing in both GM and Carillon Reams 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 Carillon Reams into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Carillon Reams Core, you can compare the effects of market volatilities on GM and Carillon Reams 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 Carillon Reams. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Carillon Reams.
Diversification Opportunities for GM and Carillon Reams
-0.84 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GM and Carillon is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Carillon Reams Core in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carillon Reams Core 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 Carillon Reams. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carillon Reams Core has no effect on the direction of GM i.e., GM and Carillon Reams go up and down completely randomly.
Pair Corralation between GM and Carillon Reams
Allowing for the 90-day total investment horizon General Motors is expected to generate 4.61 times more return on investment than Carillon Reams. However, GM is 4.61 times more volatile than Carillon Reams Core. It trades about 0.05 of its potential returns per unit of risk. Carillon Reams Core is currently generating about 0.03 per unit of risk. If you would invest 3,807 in General Motors on August 24, 2024 and sell it today you would earn a total of 2,046 from holding General Motors or generate 53.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Carillon Reams Core
Performance |
| Timeline |
| General Motors |
| Carillon Reams Core |
GM and Carillon Reams Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Carillon Reams
The main advantage of trading using opposite GM and Carillon Reams positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Carillon Reams 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 Carillon Reams will offset losses from the drop in Carillon Reams' long position.The idea behind General Motors and Carillon Reams Core 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.| Carillon Reams vs. Metropolitan West Total | Carillon Reams vs. Pimco Total Return | Carillon Reams vs. Total Return Fund | Carillon Reams vs. Total Return Fund |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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