Correlation Between GM and Westcore Small
Can any of the company-specific risk be diversified away by investing in both GM and Westcore Small 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 Westcore Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Westcore Small Cap Growth, you can compare the effects of market volatilities on GM and Westcore Small 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 Westcore Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Westcore Small.
Diversification Opportunities for GM and Westcore Small
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between GM and Westcore is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Westcore Small Cap Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westcore Small Cap 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 Westcore Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westcore Small Cap has no effect on the direction of GM i.e., GM and Westcore Small go up and down completely randomly.
Pair Corralation between GM and Westcore Small
Allowing for the 90-day total investment horizon General Motors is expected to generate 1.76 times more return on investment than Westcore Small. However, GM is 1.76 times more volatile than Westcore Small Cap Growth. It trades about 0.04 of its potential returns per unit of risk. Westcore Small Cap Growth is currently generating about 0.05 per unit of risk. If you would invest 3,848 in General Motors on October 23, 2024 and sell it today you would earn a total of 1,249 from holding General Motors or generate 32.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Westcore Small Cap Growth
Performance |
| Timeline |
| General Motors |
| Westcore Small Cap |
GM and Westcore Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Westcore Small
The main advantage of trading using opposite GM and Westcore Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Westcore Small 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 Westcore Small will offset losses from the drop in Westcore Small's long position.The idea behind General Motors and Westcore Small Cap Growth 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.| Westcore Small vs. Rationalpier 88 Convertible | Westcore Small vs. Virtus Convertible | Westcore Small vs. Calamos Dynamic Convertible | Westcore Small vs. Absolute Convertible Arbitrage |
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 CEOs Directory module to screen CEOs from public companies around the world.
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