Correlation Between GM and Ivy Asset

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

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

Diversification Opportunities for GM and Ivy Asset

0.07

Correlation Coefficient

GM  Ivy Asset

Significant diversification

The 3 months correlation between GM and Ivy is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Ivy Asset Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ivy Asset Strategy 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 Ivy Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ivy Asset Strategy has no effect on the direction of GM i.e., GM and Ivy Asset go up and down completely randomly.

Pair Corralation between GM and Ivy Asset

Allowing for the 90-day total investment horizon General Motors is expected to under-perform the Ivy Asset. In addition to that, GM is 1.56 times more volatile than Ivy Asset Strategy. It trades about -0.26 of its total potential returns per unit of risk. Ivy Asset Strategy is currently generating about -0.23 per unit of volatility. If you would invest  2,359  in Ivy Asset Strategy on September 24, 2024 and sell it today you would lose (159.00) from holding Ivy Asset Strategy or give up 6.74% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

General Motors  vs.  Ivy Asset Strategy

General Motors

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in General Motors are ranked lower than 5 (%) 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.

Ivy Asset Strategy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ivy Asset Strategy has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with GM and Ivy Asset

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

The idea behind General Motors and Ivy Asset Strategy 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.

Check out your portfolio center.

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 CEOs Directory module to screen CEOs from public companies around the world.