Correlation Between RioCan Real and GM
Can any of the company-specific risk be diversified away by investing in both RioCan Real and GM 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 RioCan Real and GM into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RioCan Real Estate and General Motors, you can compare the effects of market volatilities on RioCan Real and GM 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 RioCan Real with a short position of GM. Check out your portfolio center. Please also check ongoing floating volatility patterns of RioCan Real and GM.
Diversification Opportunities for RioCan Real and GM
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between RioCan and GM is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding RioCan Real Estate and General Motors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General Motors and RioCan Real 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 RioCan Real Estate are associated (or correlated) with GM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of General Motors has no effect on the direction of RioCan Real i.e., RioCan Real and GM go up and down completely randomly.
Pair Corralation between RioCan Real and GM
Assuming the 90 days trading horizon RioCan Real Estate is expected to under-perform the GM. But the stock apears to be less risky and, when comparing its historical volatility, RioCan Real Estate is 1.18 times less risky than GM. The stock trades about -0.07 of its potential returns per unit of risk. The General Motors is currently generating about 0.08 of returns per unit of risk over similar time horizon. 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 | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
RioCan Real Estate vs. General Motors
Performance |
| Timeline |
| RioCan Real Estate |
| General Motors |
RioCan Real and GM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RioCan Real and GM
The main advantage of trading using opposite RioCan Real and GM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RioCan Real position performs unexpectedly, GM 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 GM will offset losses from the drop in GM's long position.| RioCan Real vs. SmartCentres Real Estate | RioCan Real vs. HR Real Estate | RioCan Real vs. Fortis Inc | RioCan Real vs. Enbridge |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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