Correlation Between GM and Wcm Focused
Can any of the company-specific risk be diversified away by investing in both GM and Wcm Focused 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 Wcm Focused into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Wcm Focused International, you can compare the effects of market volatilities on GM and Wcm Focused 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 Wcm Focused. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Wcm Focused.
Diversification Opportunities for GM and Wcm Focused
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between GM and Wcm is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Wcm Focused International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wcm Focused International 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 Wcm Focused. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wcm Focused International has no effect on the direction of GM i.e., GM and Wcm Focused go up and down completely randomly.
Pair Corralation between GM and Wcm Focused
Allowing for the 90-day total investment horizon General Motors is expected to under-perform the Wcm Focused. In addition to that, GM is 2.28 times more volatile than Wcm Focused International. It trades about -0.32 of its total potential returns per unit of risk. Wcm Focused International is currently generating about 0.11 per unit of volatility. If you would invest 1,012 in Wcm Focused International on November 28, 2024 and sell it today you would earn a total of 23.00 from holding Wcm Focused International or generate 2.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Wcm Focused International
Performance |
| Timeline |
| General Motors |
| Wcm Focused International |
GM and Wcm Focused Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Wcm Focused
The main advantage of trading using opposite GM and Wcm Focused positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Wcm Focused 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 Wcm Focused will offset losses from the drop in Wcm Focused's long position.The idea behind General Motors and Wcm Focused International 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.| Wcm Focused vs. Ab High Income | Wcm Focused vs. Transamerica High Yield | Wcm Focused vs. Aqr Alternative Risk | Wcm Focused vs. Goldman Sachs High |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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