Correlation Between GM and Deutsche Global
Can any of the company-specific risk be diversified away by investing in both GM and Deutsche 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 Deutsche 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 Deutsche Global Infrastructure, you can compare the effects of market volatilities on GM and Deutsche 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 Deutsche Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Deutsche Global.
Diversification Opportunities for GM and Deutsche Global
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GM and Deutsche is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Deutsche Global Infrastructure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deutsche Global Infr 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 Deutsche Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deutsche Global Infr has no effect on the direction of GM i.e., GM and Deutsche Global go up and down completely randomly.
Pair Corralation between GM and Deutsche Global
Allowing for the 90-day total investment horizon General Motors is expected to under-perform the Deutsche Global. In addition to that, GM is 2.62 times more volatile than Deutsche Global Infrastructure. It trades about -0.09 of its total potential returns per unit of risk. Deutsche Global Infrastructure is currently generating about 0.06 per unit of volatility. If you would invest 1,506 in Deutsche Global Infrastructure on November 9, 2024 and sell it today you would earn a total of 17.00 from holding Deutsche Global Infrastructure or generate 1.13% 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. Deutsche Global Infrastructure
Performance |
| Timeline |
| General Motors |
| Deutsche Global Infr |
GM and Deutsche Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Deutsche Global
The main advantage of trading using opposite GM and Deutsche Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Deutsche 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 Deutsche Global will offset losses from the drop in Deutsche Global's long position.The idea behind General Motors and Deutsche Global Infrastructure 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.| Deutsche Global vs. Invesco Global Health | Deutsche Global vs. Deutsche Health And | Deutsche Global vs. The Gabelli Healthcare | Deutsche Global vs. Highland Longshort Healthcare |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
Other Complementary Tools
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities |