Correlation Between GM and Tsw Emerging
Can any of the company-specific risk be diversified away by investing in both GM and Tsw Emerging 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 Tsw Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Tsw Emerging Markets, you can compare the effects of market volatilities on GM and Tsw Emerging 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 Tsw Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Tsw Emerging.
Diversification Opportunities for GM and Tsw Emerging
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GM and Tsw is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Tsw Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tsw Emerging Markets 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 Tsw Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tsw Emerging Markets has no effect on the direction of GM i.e., GM and Tsw Emerging go up and down completely randomly.
Pair Corralation between GM and Tsw Emerging
Allowing for the 90-day total investment horizon General Motors is expected to generate 3.73 times more return on investment than Tsw Emerging. However, GM is 3.73 times more volatile than Tsw Emerging Markets. It trades about 0.2 of its potential returns per unit of risk. Tsw Emerging Markets is currently generating about -0.21 per unit of risk. If you would invest 4,484 in General Motors on August 30, 2024 and sell it today you would earn a total of 1,066 from holding General Motors or generate 23.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Tsw Emerging Markets
Performance |
| Timeline |
| General Motors |
| Tsw Emerging Markets |
GM and Tsw Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Tsw Emerging
The main advantage of trading using opposite GM and Tsw Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Tsw Emerging 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 Tsw Emerging will offset losses from the drop in Tsw Emerging's long position.The idea behind General Motors and Tsw Emerging Markets 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.| Tsw Emerging vs. Volumetric Fund Volumetric | Tsw Emerging vs. Issachar Fund Class | Tsw Emerging vs. Shelton Funds | Tsw Emerging vs. Ab Value Fund |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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