Correlation Between GM and Trinity Capital
Can any of the company-specific risk be diversified away by investing in both GM and Trinity Capital 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 Trinity Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Trinity Capital, you can compare the effects of market volatilities on GM and Trinity Capital 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 Trinity Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Trinity Capital.
Diversification Opportunities for GM and Trinity Capital
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GM and Trinity is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Trinity Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trinity Capital 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 Trinity Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trinity Capital has no effect on the direction of GM i.e., GM and Trinity Capital go up and down completely randomly.
Pair Corralation between GM and Trinity Capital
Allowing for the 90-day total investment horizon General Motors is expected to generate 1.36 times more return on investment than Trinity Capital. However, GM is 1.36 times more volatile than Trinity Capital. It trades about 0.32 of its potential returns per unit of risk. Trinity Capital is currently generating about 0.09 per unit of risk. If you would invest 5,273 in General Motors on August 27, 2024 and sell it today you would earn a total of 747.00 from holding General Motors or generate 14.17% 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. Trinity Capital
Performance |
| Timeline |
| General Motors |
| Trinity Capital |
GM and Trinity Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Trinity Capital
The main advantage of trading using opposite GM and Trinity Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Trinity Capital 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 Trinity Capital will offset losses from the drop in Trinity Capital's long position.The idea behind General Motors and Trinity Capital 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.| Trinity Capital vs. PowerUp Acquisition Corp | Trinity Capital vs. Aurora Innovation | Trinity Capital vs. HUMANA INC | Trinity Capital vs. Aquagold International |
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 CEOs Directory module to screen CEOs from public companies around the world.
Other Complementary Tools
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm |