Correlation Between GM and UBSFund Solutions

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

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

Diversification Opportunities for GM and UBSFund Solutions

0.54

Correlation Coefficient

GM  UBSFund Solutions

Very weak diversification

The 3 months correlation between GM and UBSFund is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and UBSFund Solutions MSCI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UBSFund Solutions MSCI 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 UBSFund Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UBSFund Solutions MSCI has no effect on the direction of GM i.e., GM and UBSFund Solutions go up and down completely randomly.

Pair Corralation between GM and UBSFund Solutions

Allowing for the 90-day total investment horizon General Motors is expected to generate 3.59 times more return on investment than UBSFund Solutions. However, GM is 3.59 times more volatile than UBSFund Solutions MSCI. It trades about 0.14 of its potential returns per unit of risk. UBSFund Solutions MSCI is currently generating about 0.13 per unit of risk. If you would invest  4,478  in General Motors on October 1, 2024 and sell it today you would earn a total of  950.00  from holding General Motors or generate 21.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

General Motors  vs.  UBSFund Solutions MSCI

General Motors

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in General Motors are ranked lower than 11 (%) 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.

UBSFund Solutions MSCI

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in UBSFund Solutions MSCI are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, UBSFund Solutions 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 UBSFund Solutions

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

The idea behind General Motors and UBSFund Solutions MSCI 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.