Correlation Between GM and Steward Global
Can any of the company-specific risk be diversified away by investing in both GM and Steward Global 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 Steward Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Steward Global Equity, you can compare the effects of market volatilities on GM and Steward Global 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 Steward Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Steward Global.
Diversification Opportunities for GM and Steward Global
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between GM and Steward is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Steward Global Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Steward Global Equity 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 Steward Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Steward Global Equity has no effect on the direction of GM i.e., GM and Steward Global go up and down completely randomly.
Pair Corralation between GM and Steward Global
Allowing for the 90-day total investment horizon General Motors is expected to generate 2.57 times more return on investment than Steward Global. However, GM is 2.57 times more volatile than Steward Global Equity. It trades about 0.09 of its potential returns per unit of risk. Steward Global Equity is currently generating about 0.07 per unit of risk. If you would invest 4,044 in General Motors on September 1, 2024 and sell it today you would earn a total of 1,515 from holding General Motors or generate 37.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.47% |
| Values | Daily Returns |
General Motors vs. Steward Global Equity
Performance |
| Timeline |
| General Motors |
| Steward Global Equity |
GM and Steward Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Steward Global
The main advantage of trading using opposite GM and Steward Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Steward Global 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 Steward Global will offset losses from the drop in Steward Global's long position.The idea behind General Motors and Steward Global Equity 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.| Steward Global vs. Steward Small Mid Cap | Steward Global vs. Steward Large Cap | Steward Global vs. Steward International Enhanced | Steward Global vs. Steward Select Bond |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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