Correlation Between GM and Aim International
Can any of the company-specific risk be diversified away by investing in both GM and Aim International 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 Aim International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Aim International Mutual, you can compare the effects of market volatilities on GM and Aim International 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 Aim International. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Aim International.
Diversification Opportunities for GM and Aim International
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between GM and Aim is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Aim International Mutual in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aim International Mutual 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 Aim International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aim International Mutual has no effect on the direction of GM i.e., GM and Aim International go up and down completely randomly.
Pair Corralation between GM and Aim International
Allowing for the 90-day total investment horizon General Motors is expected to under-perform the Aim International. In addition to that, GM is 2.55 times more volatile than Aim International Mutual. It trades about -0.02 of its total potential returns per unit of risk. Aim International Mutual is currently generating about 0.03 per unit of volatility. If you would invest 3,821 in Aim International Mutual on December 5, 2024 and sell it today you would earn a total of 18.00 from holding Aim International Mutual or generate 0.47% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
General Motors vs. Aim International Mutual
Performance |
Timeline |
General Motors |
Aim International Mutual |
GM and Aim International Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with GM and Aim International
The main advantage of trading using opposite GM and Aim International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Aim International 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 Aim International will offset losses from the drop in Aim International's long position.The idea behind General Motors and Aim International Mutual 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.Aim International vs. Invesco Municipal Income | Aim International vs. Invesco Municipal Income | Aim International vs. Invesco Municipal Income | Aim International vs. Oppenheimer Rising Dividends |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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