Correlation Between GM and Ridgeworth Ceredex
Can any of the company-specific risk be diversified away by investing in both GM and Ridgeworth Ceredex 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 Ridgeworth Ceredex into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Ridgeworth Ceredex Mid Cap, you can compare the effects of market volatilities on GM and Ridgeworth Ceredex 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 Ridgeworth Ceredex. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Ridgeworth Ceredex.
Diversification Opportunities for GM and Ridgeworth Ceredex
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GM and Ridgeworth is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Ridgeworth Ceredex Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ridgeworth Ceredex Mid 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 Ridgeworth Ceredex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ridgeworth Ceredex Mid has no effect on the direction of GM i.e., GM and Ridgeworth Ceredex go up and down completely randomly.
Pair Corralation between GM and Ridgeworth Ceredex
Allowing for the 90-day total investment horizon General Motors is expected to generate 2.12 times more return on investment than Ridgeworth Ceredex. However, GM is 2.12 times more volatile than Ridgeworth Ceredex Mid Cap. It trades about 0.08 of its potential returns per unit of risk. Ridgeworth Ceredex Mid Cap is currently generating about 0.05 per unit of risk. If you would invest 4,411 in General Motors on September 3, 2024 and sell it today you would earn a total of 1,148 from holding General Motors or generate 26.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Ridgeworth Ceredex Mid Cap
Performance |
| Timeline |
| General Motors |
| Ridgeworth Ceredex Mid |
GM and Ridgeworth Ceredex Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Ridgeworth Ceredex
The main advantage of trading using opposite GM and Ridgeworth Ceredex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Ridgeworth Ceredex 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 Ridgeworth Ceredex will offset losses from the drop in Ridgeworth Ceredex's long position.The idea behind General Motors and Ridgeworth Ceredex Mid Cap 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.| Ridgeworth Ceredex vs. Calamos Global Equity | Ridgeworth Ceredex vs. Ms Global Fixed | Ridgeworth Ceredex vs. The Fixed Income | Ridgeworth Ceredex vs. Multimedia Portfolio Multimedia |
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.
Other Complementary Tools
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation |