Correlation Between GM and ProShares
Can any of the company-specific risk be diversified away by investing in both GM and ProShares 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 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, you can compare the effects of market volatilities on GM and ProShares 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. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and ProShares.
Diversification Opportunities for GM and ProShares
Average diversification
The 3 months correlation between GM and ProShares is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and ProShares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares 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. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares has no effect on the direction of GM i.e., GM and ProShares go up and down completely randomly.
Pair Corralation between GM and ProShares
If you would invest 3,348 in General Motors on September 3, 2024 and sell it today you would earn a total of 2,156 from holding General Motors or generate 64.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 0.4% |
| Values | Daily Returns |
General Motors vs. ProShares
Performance |
| Timeline |
| General Motors |
| ProShares |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
GM and ProShares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and ProShares
The main advantage of trading using opposite GM and ProShares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, ProShares 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 will offset losses from the drop in ProShares' long position.The idea behind General Motors and ProShares 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 vs. ProShares SP 500 | ProShares vs. iShares Edge Investment | ProShares vs. ProShares SP 500 | ProShares vs. ProShares SP 500 |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
Other Complementary Tools
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years |