Correlation Between GM and Pioneer High
Can any of the company-specific risk be diversified away by investing in both GM and Pioneer High 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 Pioneer High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Pioneer High Yield, you can compare the effects of market volatilities on GM and Pioneer High 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 Pioneer High. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Pioneer High.
Diversification Opportunities for GM and Pioneer High
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between GM and Pioneer is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Pioneer High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pioneer High Yield 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 Pioneer High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pioneer High Yield has no effect on the direction of GM i.e., GM and Pioneer High go up and down completely randomly.
Pair Corralation between GM and Pioneer High
Allowing for the 90-day total investment horizon General Motors is expected to under-perform the Pioneer High. In addition to that, GM is 15.3 times more volatile than Pioneer High Yield. It trades about -0.15 of its total potential returns per unit of risk. Pioneer High Yield is currently generating about 0.16 per unit of volatility. If you would invest 880.00 in Pioneer High Yield on September 12, 2024 and sell it today you would earn a total of 5.00 from holding Pioneer High Yield or generate 0.57% 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. Pioneer High Yield
Performance |
| Timeline |
| General Motors |
| Pioneer High Yield |
GM and Pioneer High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Pioneer High
The main advantage of trading using opposite GM and Pioneer High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Pioneer High 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 Pioneer High will offset losses from the drop in Pioneer High's long position.The idea behind General Motors and Pioneer High Yield 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.| Pioneer High vs. Putnman Retirement Ready | Pioneer High vs. Pro Blend Moderate Term | Pioneer High vs. Dimensional Retirement Income |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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