Correlation Between GM and Vy Clarion

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

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

Diversification Opportunities for GM and Vy Clarion

-0.57

Correlation Coefficient

GM  Vy Clarion

Excellent diversification

The 3 months correlation between GM and IRGIX is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Vy Clarion Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vy Clarion Global 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 Vy Clarion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vy Clarion Global has no effect on the direction of GM i.e., GM and Vy Clarion go up and down completely randomly.

Pair Corralation between GM and Vy Clarion

Allowing for the 90-day total investment horizon General Motors is expected to under-perform the Vy Clarion. In addition to that, GM is 2.41 times more volatile than Vy Clarion Global. It trades about -0.22 of its total potential returns per unit of risk. Vy Clarion Global is currently generating about -0.29 per unit of volatility. If you would invest  1,066  in Vy Clarion Global on September 26, 2024 and sell it today you would lose (62.00) from holding Vy Clarion Global or give up 5.82% of portfolio value over 90 days.

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

General Motors  vs.  Vy Clarion Global

General Motors

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in General Motors are ranked lower than 9 (%) 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.

Vy Clarion Global

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vy Clarion Global has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's forward 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 Vy Clarion

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

The idea behind General Motors and Vy Clarion Global 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..