Correlation Between GM and Sequoia III
Can any of the company-specific risk be diversified away by investing in both GM and Sequoia III 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 Sequoia III into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Sequoia III Renda, you can compare the effects of market volatilities on GM and Sequoia III 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 Sequoia III. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Sequoia III.
Diversification Opportunities for GM and Sequoia III
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between GM and Sequoia is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Sequoia III Renda in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sequoia III Renda 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 Sequoia III. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sequoia III Renda has no effect on the direction of GM i.e., GM and Sequoia III go up and down completely randomly.
Pair Corralation between GM and Sequoia III
Allowing for the 90-day total investment horizon General Motors is expected to generate 2.84 times more return on investment than Sequoia III. However, GM is 2.84 times more volatile than Sequoia III Renda. It trades about 0.05 of its potential returns per unit of risk. Sequoia III Renda is currently generating about -0.03 per unit of risk. If you would invest 3,805 in General Motors on September 3, 2024 and sell it today you would earn a total of 1,699 from holding General Motors or generate 44.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
General Motors vs. Sequoia III Renda
Performance |
| Timeline |
| General Motors |
| Sequoia III Renda |
GM and Sequoia III Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Sequoia III
The main advantage of trading using opposite GM and Sequoia III positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Sequoia III 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 Sequoia III will offset losses from the drop in Sequoia III's long position.The idea behind General Motors and Sequoia III Renda 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.| Sequoia III vs. Real Estate Investment | Sequoia III vs. NAVI CRDITO IMOBILIRIO | Sequoia III vs. LIFE CAPITAL PARTNERS | Sequoia III vs. Cshg Jhsf Prime |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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