Correlation Between GM and Tcw Global
Can any of the company-specific risk be diversified away by investing in both GM and Tcw Global 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 Tcw Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Tcw Global Real, you can compare the effects of market volatilities on GM and Tcw Global 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 Tcw Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Tcw Global.
Diversification Opportunities for GM and Tcw Global
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GM and Tcw is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Tcw Global Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tcw Global Real 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 Tcw Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tcw Global Real has no effect on the direction of GM i.e., GM and Tcw Global go up and down completely randomly.
Pair Corralation between GM and Tcw Global
Allowing for the 90-day total investment horizon General Motors is expected to generate 2.16 times more return on investment than Tcw Global. However, GM is 2.16 times more volatile than Tcw Global Real. It trades about 0.05 of its potential returns per unit of risk. Tcw Global Real is currently generating about 0.04 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 Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Tcw Global Real
Performance |
| Timeline |
| General Motors |
| Tcw Global Real |
GM and Tcw Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Tcw Global
The main advantage of trading using opposite GM and Tcw Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Tcw Global 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 Tcw Global will offset losses from the drop in Tcw Global's long position.The idea behind General Motors and Tcw Global Real 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.| Tcw Global vs. Thrivent Small Cap | Tcw Global vs. Tiaa Cref Real Estate | Tcw Global vs. Guggenheim Risk Managed | Tcw Global vs. Applied Finance Explorer |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
Other Complementary Tools
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. |