Correlation Between GM and Wabmsx
Can any of the company-specific risk be diversified away by investing in both GM and Wabmsx 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 Wabmsx into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Wabmsx, you can compare the effects of market volatilities on GM and Wabmsx 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 Wabmsx. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Wabmsx.
Diversification Opportunities for GM and Wabmsx
Weak diversification
The 3 months correlation between GM and Wabmsx is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Wabmsx in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wabmsx 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 Wabmsx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wabmsx has no effect on the direction of GM i.e., GM and Wabmsx go up and down completely randomly.
Pair Corralation between GM and Wabmsx
Allowing for the 90-day total investment horizon General Motors is expected to under-perform the Wabmsx. In addition to that, GM is 4.09 times more volatile than Wabmsx. It trades about -0.13 of its total potential returns per unit of risk. Wabmsx is currently generating about 0.17 per unit of volatility. If you would invest 1,588 in Wabmsx on November 5, 2024 and sell it today you would earn a total of 36.00 from holding Wabmsx or generate 2.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
General Motors vs. Wabmsx
Performance |
| Timeline |
| General Motors |
| Wabmsx |
GM and Wabmsx Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Wabmsx
The main advantage of trading using opposite GM and Wabmsx positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Wabmsx 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 Wabmsx will offset losses from the drop in Wabmsx's long position.The idea behind General Motors and Wabmsx 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.| Wabmsx vs. Praxis Small Cap | Wabmsx vs. Df Dent Small | Wabmsx vs. Ishares Russell 2000 | Wabmsx vs. Smallcap Fund Fka |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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