Correlation Between GM and Amundi MSCI

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

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

Diversification Opportunities for GM and Amundi MSCI

-0.74

Correlation Coefficient

GM  Amundi MSCI

Pay attention - limited upside

The 3 months correlation between GM and Amundi is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Amundi MSCI Europe in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amundi MSCI Europe 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 Amundi MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amundi MSCI Europe has no effect on the direction of GM i.e., GM and Amundi MSCI go up and down completely randomly.

Pair Corralation between GM and Amundi MSCI

Allowing for the 90-day total investment horizon General Motors is expected to under-perform the Amundi MSCI. In addition to that, GM is 3.99 times more volatile than Amundi MSCI Europe. It trades about -0.3 of its total potential returns per unit of risk. Amundi MSCI Europe is currently generating about -0.13 per unit of volatility. If you would invest  7,878  in Amundi MSCI Europe on September 24, 2024 and sell it today you would lose (126.00) from holding Amundi MSCI Europe or give up 1.6% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

General Motors  vs.  Amundi MSCI Europe

General Motors

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in General Motors are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very weak primary indicators, GM may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Amundi MSCI Europe

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Amundi MSCI Europe has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Amundi MSCI is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with GM and Amundi MSCI

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

The idea behind General Motors and Amundi MSCI Europe 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.