Correlation Between GM and Virtus Investment
Can any of the company-specific risk be diversified away by investing in both GM and Virtus Investment 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 Virtus Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Virtus Investment Partners, you can compare the effects of market volatilities on GM and Virtus Investment 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 Virtus Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Virtus Investment.
Diversification Opportunities for GM and Virtus Investment
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between GM and Virtus is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Virtus Investment Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus Investment 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 Virtus Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus Investment has no effect on the direction of GM i.e., GM and Virtus Investment go up and down completely randomly.
Pair Corralation between GM and Virtus Investment
Allowing for the 90-day total investment horizon GM is expected to generate 2.07 times less return on investment than Virtus Investment. In addition to that, GM is 1.12 times more volatile than Virtus Investment Partners. It trades about 0.12 of its total potential returns per unit of risk. Virtus Investment Partners is currently generating about 0.28 per unit of volatility. If you would invest 20,375 in Virtus Investment Partners on August 31, 2024 and sell it today you would earn a total of 3,225 from holding Virtus Investment Partners or generate 15.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Virtus Investment Partners
Performance |
| Timeline |
| General Motors |
| Virtus Investment |
GM and Virtus Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Virtus Investment
The main advantage of trading using opposite GM and Virtus Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Virtus Investment 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 Virtus Investment will offset losses from the drop in Virtus Investment's long position.The idea behind General Motors and Virtus Investment Partners 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.| Virtus Investment vs. Ameriprise Financial | Virtus Investment vs. Ares Management Corp | Virtus Investment vs. Superior Plus Corp | Virtus Investment vs. NMI Holdings |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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