Correlation Between GM and ProShares Short
Can any of the company-specific risk be diversified away by investing in both GM and ProShares Short 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 ProShares Short into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and ProShares Short SP500, you can compare the effects of market volatilities on GM and ProShares Short 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 ProShares Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and ProShares Short.
Diversification Opportunities for GM and ProShares Short
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GM and ProShares is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and ProShares Short SP500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Short SP500 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 ProShares Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Short SP500 has no effect on the direction of GM i.e., GM and ProShares Short go up and down completely randomly.
Pair Corralation between GM and ProShares Short
Allowing for the 90-day total investment horizon General Motors is expected to generate 2.64 times more return on investment than ProShares Short. However, GM is 2.64 times more volatile than ProShares Short SP500. It trades about 0.07 of its potential returns per unit of risk. ProShares Short SP500 is currently generating about -0.08 per unit of risk. If you would invest 3,536 in General Motors on August 31, 2024 and sell it today you would earn a total of 2,023 from holding General Motors or generate 57.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. ProShares Short SP500
Performance |
| Timeline |
| General Motors |
| ProShares Short SP500 |
GM and ProShares Short Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and ProShares Short
The main advantage of trading using opposite GM and ProShares Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, ProShares Short 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 ProShares Short will offset losses from the drop in ProShares Short's long position.The idea behind General Motors and ProShares Short SP500 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.| ProShares Short vs. ProShares Short QQQ | ProShares Short vs. ProShares Short Dow30 | ProShares Short vs. ProShares UltraShort SP500 | ProShares Short vs. ProShares Short Russell2000 |
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 Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
Other Complementary Tools
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules |