Correlation Between GM and Touchstone Sustainability
Can any of the company-specific risk be diversified away by investing in both GM and Touchstone Sustainability 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 Touchstone Sustainability into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Touchstone Sustainability And, you can compare the effects of market volatilities on GM and Touchstone Sustainability 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 Touchstone Sustainability. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Touchstone Sustainability.
Diversification Opportunities for GM and Touchstone Sustainability
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between GM and Touchstone is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Touchstone Sustainability And in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Touchstone Sustainability 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 Touchstone Sustainability. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Touchstone Sustainability has no effect on the direction of GM i.e., GM and Touchstone Sustainability go up and down completely randomly.
Pair Corralation between GM and Touchstone Sustainability
Allowing for the 90-day total investment horizon General Motors is expected to generate 2.16 times more return on investment than Touchstone Sustainability. However, GM is 2.16 times more volatile than Touchstone Sustainability And. It trades about 0.12 of its potential returns per unit of risk. Touchstone Sustainability And is currently generating about 0.06 per unit of risk. If you would invest 3,849 in General Motors on August 28, 2024 and sell it today you would earn a total of 2,171 from holding General Motors or generate 56.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Touchstone Sustainability And
Performance |
| Timeline |
| General Motors |
| Touchstone Sustainability |
GM and Touchstone Sustainability Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Touchstone Sustainability
The main advantage of trading using opposite GM and Touchstone Sustainability positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Touchstone Sustainability 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 Touchstone Sustainability will offset losses from the drop in Touchstone Sustainability's long position.The idea behind General Motors and Touchstone Sustainability And 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.| Touchstone Sustainability vs. Mid Cap Growth | Touchstone Sustainability vs. Growth Opportunities Fund | Touchstone Sustainability vs. Active Bond Fund | Touchstone Sustainability vs. High Yield Fund |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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