Correlation Between GM and Virtus Kar
Can any of the company-specific risk be diversified away by investing in both GM and Virtus Kar 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 Kar 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 Kar Small Cap, you can compare the effects of market volatilities on GM and Virtus Kar 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 Kar. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Virtus Kar.
Diversification Opportunities for GM and Virtus Kar
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between GM and Virtus is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Virtus Kar Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus Kar 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 Virtus Kar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus Kar Small has no effect on the direction of GM i.e., GM and Virtus Kar go up and down completely randomly.
Pair Corralation between GM and Virtus Kar
Allowing for the 90-day total investment horizon General Motors is expected to generate 1.77 times more return on investment than Virtus Kar. However, GM is 1.77 times more volatile than Virtus Kar Small Cap. It trades about 0.05 of its potential returns per unit of risk. Virtus Kar Small Cap is currently generating about 0.06 per unit of risk. If you would invest 3,749 in General Motors on August 29, 2024 and sell it today you would earn a total of 1,730 from holding General Motors or generate 46.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Virtus Kar Small Cap
Performance |
| Timeline |
| General Motors |
| Virtus Kar Small |
GM and Virtus Kar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Virtus Kar
The main advantage of trading using opposite GM and Virtus Kar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Virtus Kar 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 Kar will offset losses from the drop in Virtus Kar's long position.The idea behind General Motors and Virtus Kar Small Cap 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 Kar vs. Virtus Kar Mid Cap | Virtus Kar vs. Midcap Fund Institutional | Virtus Kar vs. Morgan Stanley Multi | Virtus Kar vs. Growth Portfolio Class |
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 Stocks Directory module to find actively traded stocks across global markets.
Other Complementary Tools
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| CEOs Directory Screen CEOs from public companies around the world |