Correlation Between GM and Siit Us
Can any of the company-specific risk be diversified away by investing in both GM and Siit Us 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 Siit Us into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Siit Managed Volatility, you can compare the effects of market volatilities on GM and Siit Us 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 Siit Us. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Siit Us.
Diversification Opportunities for GM and Siit Us
Poor diversification
The 3 months correlation between GM and Siit is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Siit Managed Volatility in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Siit Managed Volatility 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 Siit Us. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Siit Managed Volatility has no effect on the direction of GM i.e., GM and Siit Us go up and down completely randomly.
Pair Corralation between GM and Siit Us
Allowing for the 90-day total investment horizon GM is expected to generate 1.11 times less return on investment than Siit Us. In addition to that, GM is 3.91 times more volatile than Siit Managed Volatility. It trades about 0.07 of its total potential returns per unit of risk. Siit Managed Volatility is currently generating about 0.31 per unit of volatility. If you would invest 1,239 in Siit Managed Volatility on September 5, 2024 and sell it today you would earn a total of 61.00 from holding Siit Managed Volatility or generate 4.92% 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. Siit Managed Volatility
Performance |
| Timeline |
| General Motors |
| Siit Managed Volatility |
GM and Siit Us Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Siit Us
The main advantage of trading using opposite GM and Siit Us positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Siit Us 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 Siit Us will offset losses from the drop in Siit Us' long position.The idea behind General Motors and Siit Managed Volatility 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.| Siit Us vs. Simt Managed Volatility | Siit Us vs. Hartford Schroders Smallmid | Siit Us vs. Fam Value Fund | Siit Us vs. Hartford Schroders Smallmid |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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