Correlation Between GM and Fondo Mutuo

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

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

Diversification Opportunities for GM and Fondo Mutuo

0.48

Correlation Coefficient

GM  Fondo Mutuo

Very weak diversification

The 3 months correlation between GM and Fondo is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Fondo Mutuo ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fondo Mutuo ETF 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 Fondo Mutuo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fondo Mutuo ETF has no effect on the direction of GM i.e., GM and Fondo Mutuo go up and down completely randomly.

Pair Corralation between GM and Fondo Mutuo

Allowing for the 90-day total investment horizon General Motors is expected to generate 3.78 times more return on investment than Fondo Mutuo. However, GM is 3.78 times more volatile than Fondo Mutuo ETF. It trades about 0.09 of its potential returns per unit of risk. Fondo Mutuo ETF is currently generating about 0.07 per unit of risk. If you would invest  4,829  in General Motors on September 3, 2024 and sell it today you would earn a total of  675.00  from holding General Motors or generate 13.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	93.75%
Values	Daily Returns

General Motors  vs.  Fondo Mutuo ETF

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.

Fondo Mutuo ETF

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Fondo Mutuo ETF are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, Fondo Mutuo is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with GM and Fondo Mutuo

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

The idea behind General Motors and Fondo Mutuo ETF 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.