Correlation Between GM and Gmo Opportunistic

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Can any of the company-specific risk be diversified away by investing in both GM and Gmo Opportunistic 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 Gmo Opportunistic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Gmo Opportunistic Income, you can compare the effects of market volatilities on GM and Gmo Opportunistic 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 Gmo Opportunistic. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Gmo Opportunistic.

Diversification Opportunities for GM and Gmo Opportunistic

0.83
  Correlation Coefficient

Very poor diversification

The 3 months correlation between GM and Gmo is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and GMO Opportunistic Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gmo Opportunistic 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 Gmo Opportunistic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gmo Opportunistic has no effect on the direction of GM i.e., GM and Gmo Opportunistic go up and down completely randomly.

Pair Corralation between GM and Gmo Opportunistic

Allowing for the 90-day total investment horizon General Motors is expected to generate 10.7 times more return on investment than Gmo Opportunistic. However, GM is 10.7 times more volatile than Gmo Opportunistic Income. It trades about 0.33 of its potential returns per unit of risk. Gmo Opportunistic Income is currently generating about 0.27 per unit of risk. If you would invest  4,006  in General Motors on December 29, 2023 and sell it today you would earn a total of  453.00  from holding General Motors or generate 11.31% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy95.65%
ValuesDaily Returns

General Motors  vs.  GMO Opportunistic Income

 Performance 
       Timeline  
General Motors 

Risk-Adjusted Performance

17 of 100

 
Low
 
High
Good
Compared to the overall equity markets, risk-adjusted returns on investments in General Motors are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of very weak primary indicators, GM displayed solid returns over the last few months and may actually be approaching a breakup point.
Gmo Opportunistic 

Risk-Adjusted Performance

12 of 100

 
Low
 
High
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Gmo Opportunistic Income are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Gmo Opportunistic is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

GM and Gmo Opportunistic Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with GM and Gmo Opportunistic

The main advantage of trading using opposite GM and Gmo Opportunistic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Gmo Opportunistic 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 Gmo Opportunistic will offset losses from the drop in Gmo Opportunistic's long position.
The idea behind General Motors and Gmo Opportunistic Income 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.
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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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.

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