Correlation Between GM and VictoryShares USAA
Can any of the company-specific risk be diversified away by investing in both GM and VictoryShares USAA 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 VictoryShares USAA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and VictoryShares USAA Core, you can compare the effects of market volatilities on GM and VictoryShares USAA 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 VictoryShares USAA. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and VictoryShares USAA.
Diversification Opportunities for GM and VictoryShares USAA
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between GM and VictoryShares is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and VictoryShares USAA Core in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VictoryShares USAA Core 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 VictoryShares USAA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VictoryShares USAA Core has no effect on the direction of GM i.e., GM and VictoryShares USAA go up and down completely randomly.
Pair Corralation between GM and VictoryShares USAA
Allowing for the 90-day total investment horizon General Motors is expected to under-perform the VictoryShares USAA. In addition to that, GM is 9.9 times more volatile than VictoryShares USAA Core. It trades about -0.05 of its total potential returns per unit of risk. VictoryShares USAA Core is currently generating about 0.09 per unit of volatility. If you would invest 4,596 in VictoryShares USAA Core on November 3, 2024 and sell it today you would earn a total of 24.50 from holding VictoryShares USAA Core or generate 0.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
General Motors vs. VictoryShares USAA Core
Performance |
| Timeline |
| General Motors |
| VictoryShares USAA Core |
GM and VictoryShares USAA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and VictoryShares USAA
The main advantage of trading using opposite GM and VictoryShares USAA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, VictoryShares USAA 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 VictoryShares USAA will offset losses from the drop in VictoryShares USAA's long position.The idea behind General Motors and VictoryShares USAA Core 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.| VictoryShares USAA vs. VictoryShares USAA Core | VictoryShares USAA vs. VictoryShares International Value | VictoryShares USAA vs. VictoryShares Small Mid | VictoryShares USAA vs. VictoryShares Value Momentum |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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