Correlation Between GM and Zevenbergen Growth
Can any of the company-specific risk be diversified away by investing in both GM and Zevenbergen Growth 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 Zevenbergen Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Zevenbergen Growth Fund, you can compare the effects of market volatilities on GM and Zevenbergen Growth 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 Zevenbergen Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Zevenbergen Growth.
Diversification Opportunities for GM and Zevenbergen Growth
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GM and Zevenbergen is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Zevenbergen Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zevenbergen Growth 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 Zevenbergen Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zevenbergen Growth has no effect on the direction of GM i.e., GM and Zevenbergen Growth go up and down completely randomly.
Pair Corralation between GM and Zevenbergen Growth
Allowing for the 90-day total investment horizon General Motors is expected to generate 1.43 times more return on investment than Zevenbergen Growth. However, GM is 1.43 times more volatile than Zevenbergen Growth Fund. It trades about 0.26 of its potential returns per unit of risk. Zevenbergen Growth Fund is currently generating about 0.36 per unit of risk. If you would invest 5,273 in General Motors on August 27, 2024 and sell it today you would earn a total of 580.00 from holding General Motors or generate 11.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Zevenbergen Growth Fund
Performance |
| Timeline |
| General Motors |
| Zevenbergen Growth |
GM and Zevenbergen Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Zevenbergen Growth
The main advantage of trading using opposite GM and Zevenbergen Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Zevenbergen Growth 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 Zevenbergen Growth will offset losses from the drop in Zevenbergen Growth's long position.The idea behind General Motors and Zevenbergen Growth Fund 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.| Zevenbergen Growth vs. Volumetric Fund Volumetric | Zevenbergen Growth vs. Omni Small Cap Value | Zevenbergen Growth vs. Ab E Opportunities | Zevenbergen Growth vs. Eic Value Fund |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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