Correlation Between GM and Investor Education

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

Diversification Opportunities for GM and Investor Education

0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between GM and Investor is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and FILTER in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investor Education 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 Investor Education. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investor Education has no effect on the direction of GM i.e., GM and Investor Education go up and down completely randomly.

Pair Corralation between GM and Investor Education

If you would invest  4,277  in General Motors on September 1, 2022 and sell it today you would lose (302.00)  from holding General Motors or give up 7.06% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy0.0%
ValuesDaily Returns

General Motors  vs.  FILTER

 Performance (%) 
       Timeline  
General Motors 
GM Performance
2 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in General Motors are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively steady primary indicators, GM is not utilizing all of its potentials. The latest stock price chaos, may contribute to medium-term losses for the stakeholders.

GM Price Channel

Investor Education 
Investor Performance
0 of 100
Over the last 90 days FILTER has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Investor Education is not utilizing all of its potentials. The new stock price agitation, may contribute to short-term losses for the retail investors.

GM and Investor Education Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with GM and Investor Education

The main advantage of trading using opposite GM and Investor Education positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Investor Education 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 Investor Education will offset losses from the drop in Investor Education long position.
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The idea behind General Motors and FILTER 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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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.

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