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 Equity, 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

-0.8

Correlation Coefficient

GM  CSIF I

Pay attention - limited upside

The 3 months correlation between GM and CSIF is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and CSIF I Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSIF I Equity 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 Equity 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 under-perform the CSIF I. In addition to that, GM is 2.06 times more volatile than CSIF I Equity. It trades about -0.07 of its total potential returns per unit of risk. CSIF I Equity is currently generating about -0.04 per unit of volatility. If you would invest  96,137  in CSIF I Equity on September 27, 2024 and sell it today you would lose (502.00) from holding CSIF I Equity or give up 0.52% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

General Motors  vs.  CSIF I Equity

General Motors

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in General Motors are ranked lower than 8 (%) 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.

CSIF I Equity

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CSIF I Equity has generated negative risk-adjusted returns adding no value to fund investors. Despite fairly strong forward indicators, CSIF I is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

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 Equity 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.