Correlation Between GM and CSIF I

Can any of the company-specific risk be diversified away by investing in both GM and CSIF I 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 CSIF I into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between General Motors and CSIF I Real, you can compare the effects of market volatilities on GM and CSIF I 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 CSIF I. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and CSIF I.

Diversification Opportunities for GM and CSIF I

0.01

Correlation Coefficient

GM  CSIF I

Significant diversification

The 3 months correlation between GM and CSIF is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and CSIF I Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSIF I Real 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 CSIF I. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CSIF I Real has no effect on the direction of GM i.e., GM and CSIF I go up and down completely randomly.

Pair Corralation between GM and CSIF I

Allowing for the 90-day total investment horizon General Motors is expected to generate 3.09 times more return on investment than CSIF I. However, GM is 3.09 times more volatile than CSIF I Real. It trades about 0.04 of its potential returns per unit of risk. CSIF I Real is currently generating about 0.06 per unit of risk. If you would invest  3,545  in General Motors on October 15, 2024 and sell it today you would earn a total of  1,440  from holding General Motors or generate 40.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.19%
Values	Daily Returns

General Motors  vs.  CSIF I Real

General Motors

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in General Motors are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very weak primary indicators, GM may actually be approaching a critical reversion point that can send shares even higher in February 2025.

CSIF I Real

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CSIF I Real are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. Despite nearly unsteady technical and fundamental indicators, CSIF I may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with GM and CSIF I

The main advantage of trading using opposite GM and CSIF I positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, CSIF I 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 CSIF I will offset losses from the drop in CSIF I's long position.

The idea behind General Motors and CSIF I Real 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 CEOs Directory module to screen CEOs from public companies around the world.