Correlation Between GM and ETF Securities
Can any of the company-specific risk be diversified away by investing in both GM and ETF Securities 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 ETF Securities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and ETF Securities, you can compare the effects of market volatilities on GM and ETF Securities 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 ETF Securities. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and ETF Securities.
Diversification Opportunities for GM and ETF Securities
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GM and ETF is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and ETF Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ETF Securities 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 ETF Securities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ETF Securities has no effect on the direction of GM i.e., GM and ETF Securities go up and down completely randomly.
Pair Corralation between GM and ETF Securities
If you would invest 4,400 in General Motors on January 26, 2024 and sell it today you would earn a total of 108.00 from holding General Motors or generate 2.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
General Motors vs. ETF Securities
Performance |
| Timeline |
| General Motors |
| ETF Securities |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
GM and ETF Securities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and ETF Securities
The main advantage of trading using opposite GM and ETF Securities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, ETF Securities 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 ETF Securities will offset losses from the drop in ETF Securities' long position.The idea behind General Motors and ETF Securities 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.| ETF Securities vs. Vanguard Total Stock | ETF Securities vs. SPDR SP 500 | ETF Securities vs. iShares Core SP | ETF Securities vs. Vanguard Total Bond |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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