Correlation Between GM and SCHWAB
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By analyzing existing cross correlation between General Motors and SCHWAB CHARLES P, you can compare the effects of market volatilities on GM and SCHWAB 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 SCHWAB. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and SCHWAB.
Diversification Opportunities for GM and SCHWAB
Excellent diversification
The 3 months correlation between GM and SCHWAB is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and SCHWAB CHARLES P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCHWAB CHARLES P 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 SCHWAB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SCHWAB CHARLES P has no effect on the direction of GM i.e., GM and SCHWAB go up and down completely randomly.
Pair Corralation between GM and SCHWAB
Allowing for the 90-day total investment horizon General Motors is expected to generate 7.16 times more return on investment than SCHWAB. However, GM is 7.16 times more volatile than SCHWAB CHARLES P. It trades about 0.32 of its potential returns per unit of risk. SCHWAB CHARLES P is currently generating about -0.01 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 Against |
| Strength | Very Weak |
| Accuracy | 90.48% |
| Values | Daily Returns |
General Motors vs. SCHWAB CHARLES P
Performance |
| Timeline |
| General Motors |
| SCHWAB CHARLES P |
GM and SCHWAB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and SCHWAB
The main advantage of trading using opposite GM and SCHWAB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, SCHWAB 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 SCHWAB will offset losses from the drop in SCHWAB's long position.The idea behind General Motors and SCHWAB CHARLES P 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.| SCHWAB vs. AEP TEX INC | SCHWAB vs. US BANK NATIONAL | SCHWAB vs. Eat Beyond Global | SCHWAB vs. Charles Schwab Corp |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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