Correlation Between GM and Sierra Tactical

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both GM and Sierra Tactical 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 Sierra Tactical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Sierra Tactical Risk, you can compare the effects of market volatilities on GM and Sierra Tactical 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 Sierra Tactical. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Sierra Tactical.

Diversification Opportunities for GM and Sierra Tactical

0.54
  Correlation Coefficient

Very weak diversification

The 3 months correlation between GM and Sierra is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Sierra Tactical Risk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sierra Tactical Risk 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 Sierra Tactical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sierra Tactical Risk has no effect on the direction of GM i.e., GM and Sierra Tactical go up and down completely randomly.

Pair Corralation between GM and Sierra Tactical

Allowing for the 90-day total investment horizon General Motors is expected to generate 4.07 times more return on investment than Sierra Tactical. However, GM is 4.07 times more volatile than Sierra Tactical Risk. It trades about 0.05 of its potential returns per unit of risk. Sierra Tactical Risk is currently generating about 0.08 per unit of risk. If you would invest  3,807  in General Motors on August 26, 2024 and sell it today you would earn a total of  2,046  from holding General Motors or generate 53.74% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy83.9%
ValuesDaily Returns

General Motors  vs.  Sierra Tactical Risk

 Performance 
       Timeline  
General Motors 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in General Motors are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very weak primary indicators, GM displayed solid returns over the last few months and may actually be approaching a breakup point.
Sierra Tactical Risk 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Sierra Tactical Risk are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Sierra Tactical is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

GM and Sierra Tactical Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with GM and Sierra Tactical

The main advantage of trading using opposite GM and Sierra Tactical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Sierra Tactical 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 Sierra Tactical will offset losses from the drop in Sierra Tactical's long position.
The idea behind General Motors and Sierra Tactical Risk 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.
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.

Other Complementary Tools

Portfolio Volatility
Check portfolio volatility and analyze historical return density to properly model market risk
Portfolio Diagnostics
Use generated alerts and portfolio events aggregator to diagnose current holdings
Technical Analysis
Check basic technical indicators and analysis based on most latest market data
Idea Optimizer
Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio
Latest Portfolios
Quick portfolio dashboard that showcases your latest portfolios