Correlation Between GM and Aspen

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

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

Diversification Opportunities for GM and Aspen

0.0

Correlation Coefficient

GM  Aspen

Pay attention - limited upside

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

Pair Corralation between GM and Aspen

If you would invest  4,604  in General Motors on October 7, 2024 and sell it today you would earn a total of  573.00  from holding General Motors or generate 12.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.79%
Values	Daily Returns

General Motors  vs.  Aspen Group

General Motors

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in General Motors are ranked lower than 7 (%) 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.

Aspen Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aspen Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Aspen is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with GM and Aspen

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

The idea behind General Motors and Aspen Group 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.