Correlation Between GM and Amg Timessquare
Can any of the company-specific risk be diversified away by investing in both GM and Amg Timessquare 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 Amg Timessquare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Amg Timessquare Small, you can compare the effects of market volatilities on GM and Amg Timessquare 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 Amg Timessquare. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Amg Timessquare.
Diversification Opportunities for GM and Amg Timessquare
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between GM and Amg is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Amg Timessquare Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amg Timessquare Small 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 Amg Timessquare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amg Timessquare Small has no effect on the direction of GM i.e., GM and Amg Timessquare go up and down completely randomly.
Pair Corralation between GM and Amg Timessquare
Allowing for the 90-day total investment horizon General Motors is expected to under-perform the Amg Timessquare. In addition to that, GM is 2.47 times more volatile than Amg Timessquare Small. It trades about -0.32 of its total potential returns per unit of risk. Amg Timessquare Small is currently generating about -0.32 per unit of volatility. If you would invest 1,355 in Amg Timessquare Small on November 28, 2024 and sell it today you would lose (82.00) from holding Amg Timessquare Small or give up 6.05% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Amg Timessquare Small
Performance |
| Timeline |
| General Motors |
| Amg Timessquare Small |
GM and Amg Timessquare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Amg Timessquare
The main advantage of trading using opposite GM and Amg Timessquare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Amg Timessquare 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 Amg Timessquare will offset losses from the drop in Amg Timessquare's long position.The idea behind General Motors and Amg Timessquare Small 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.| Amg Timessquare vs. Amg Timessquare Mid | Amg Timessquare vs. Amg Timessquare Small | Amg Timessquare vs. Vanguard Institutional Total | Amg Timessquare vs. Jpmorgan Intrepid Growth |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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