Correlation Between GM and Aberdeen Ultra

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

Diversification Opportunities for GM and Aberdeen Ultra

-0.12
  Correlation Coefficient

Good diversification

The 3 months correlation between GM and Aberdeen is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Aberdeen Ultra Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aberdeen Ultra Short 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 Aberdeen Ultra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aberdeen Ultra Short has no effect on the direction of GM i.e., GM and Aberdeen Ultra go up and down completely randomly.

Pair Corralation between GM and Aberdeen Ultra

Allowing for the 90-day total investment horizon General Motors is expected to under-perform the Aberdeen Ultra. In addition to that, GM is 119.32 times more volatile than Aberdeen Ultra Short. It trades about 0.0 of its total potential returns per unit of risk. Aberdeen Ultra Short is currently generating about -0.03 per unit of volatility. If you would invest  1,009  in Aberdeen Ultra Short on July 8, 2022 and sell it today you would lose (3.00)  from holding Aberdeen Ultra Short or give up 0.3% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

General Motors  vs.  Aberdeen Ultra Short

 Performance (%) 
       Timeline  
General Motors 
GM Performance
4 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in General Motors are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting primary indicators, GM may actually be approaching a critical reversion point that can send shares even higher in November 2022.

GM Price Channel

Aberdeen Ultra Short 
Aberdeen Performance
0 of 100
Over the last 90 days Aberdeen Ultra Short has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Aberdeen Ultra is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Aberdeen Price Channel

GM and Aberdeen Ultra Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with GM and Aberdeen Ultra

The main advantage of trading using opposite GM and Aberdeen Ultra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Aberdeen Ultra 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 Aberdeen Ultra will offset losses from the drop in Aberdeen Ultra's long position.
GM vs. Amazon Inc
The idea behind General Motors and Aberdeen Ultra Short 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.
Aberdeen Ultra vs. Johnson Johnson
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..

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