Correlation Between GM and Saat Market
Can any of the company-specific risk be diversified away by investing in both GM and Saat Market 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 Saat Market into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Saat Market Growth, you can compare the effects of market volatilities on GM and Saat Market 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 Saat Market. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Saat Market.
Diversification Opportunities for GM and Saat Market
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between GM and Saat is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Saat Market Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Saat Market Growth 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 Saat Market. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Saat Market Growth has no effect on the direction of GM i.e., GM and Saat Market go up and down completely randomly.
Pair Corralation between GM and Saat Market
Allowing for the 90-day total investment horizon General Motors is expected to generate 3.65 times more return on investment than Saat Market. However, GM is 3.65 times more volatile than Saat Market Growth. It trades about 0.05 of its potential returns per unit of risk. Saat Market Growth is currently generating about 0.05 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 1,754 from holding General Motors or generate 46.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Saat Market Growth
Performance |
| Timeline |
| General Motors |
| Saat Market Growth |
GM and Saat Market Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Saat Market
The main advantage of trading using opposite GM and Saat Market positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Saat Market 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 Saat Market will offset losses from the drop in Saat Market's long position.The idea behind General Motors and Saat Market Growth 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.| Saat Market vs. Asg Managed Futures | Saat Market vs. Tiaa Cref Inflation Linked Bond | Saat Market vs. Western Asset Inflation | Saat Market vs. Ab Bond Inflation |
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 Stocks Directory module to find actively traded stocks across global markets.
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