Correlation Between GM and Strategic Enhanced

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

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

Diversification Opportunities for GM and Strategic Enhanced

-0.83

Correlation Coefficient

GM  Strategic Enhanced

Pay attention - limited upside

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

Pair Corralation between GM and Strategic Enhanced

Allowing for the 90-day total investment horizon General Motors is expected to under-perform the Strategic Enhanced. In addition to that, GM is 8.86 times more volatile than Strategic Enhanced Yield. It trades about -0.15 of its total potential returns per unit of risk. Strategic Enhanced Yield is currently generating about 0.09 per unit of volatility. If you would invest  867.00  in Strategic Enhanced Yield on September 15, 2024 and sell it today you would earn a total of  5.00  from holding Strategic Enhanced Yield or generate 0.58% return on investment over 90 days.

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

General Motors  vs.  Strategic Enhanced Yield

General Motors

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in General Motors are ranked lower than 6 (%) 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.

Strategic Enhanced Yield

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Strategic Enhanced Yield has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Strategic Enhanced is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with GM and Strategic Enhanced

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

The idea behind General Motors and Strategic Enhanced Yield 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.