Correlation Between GM and Popular Total
Can any of the company-specific risk be diversified away by investing in both GM and Popular Total 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 Popular Total into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Popular Total Return, you can compare the effects of market volatilities on GM and Popular Total 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 Popular Total. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Popular Total.
Diversification Opportunities for GM and Popular Total
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between GM and Popular is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Popular Total Return in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Popular Total Return 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 Popular Total. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Popular Total Return has no effect on the direction of GM i.e., GM and Popular Total go up and down completely randomly.
Pair Corralation between GM and Popular Total
Allowing for the 90-day total investment horizon General Motors is expected to under-perform the Popular Total. In addition to that, GM is 7.78 times more volatile than Popular Total Return. It trades about -0.14 of its total potential returns per unit of risk. Popular Total Return is currently generating about 0.04 per unit of volatility. If you would invest 2,866 in Popular Total Return on September 12, 2024 and sell it today you would earn a total of 8.00 from holding Popular Total Return or generate 0.28% 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. Popular Total Return
Performance |
| Timeline |
| General Motors |
| Popular Total Return |
GM and Popular Total Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Popular Total
The main advantage of trading using opposite GM and Popular Total positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Popular Total 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 Popular Total will offset losses from the drop in Popular Total's long position.The idea behind General Motors and Popular Total Return 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.| Popular Total vs. Popular Total Return | Popular Total vs. Popular Income Plus | Popular Total vs. Popular Income Plus | Popular Total vs. FT Vest Equity |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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