Correlation Between GM and Columbia Integrated

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both GM and Columbia Integrated 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 Columbia Integrated into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Columbia Integrated Small, you can compare the effects of market volatilities on GM and Columbia Integrated 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 Columbia Integrated. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Columbia Integrated.

Diversification Opportunities for GM and Columbia Integrated

0.44
  Correlation Coefficient

Very weak diversification

The 3 months correlation between GM and Columbia is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Columbia Integrated Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Integrated Small 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 Columbia Integrated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Integrated Small has no effect on the direction of GM i.e., GM and Columbia Integrated go up and down completely randomly.

Pair Corralation between GM and Columbia Integrated

Allowing for the 90-day total investment horizon General Motors is expected to generate 1.66 times more return on investment than Columbia Integrated. However, GM is 1.66 times more volatile than Columbia Integrated Small. It trades about 0.11 of its potential returns per unit of risk. Columbia Integrated Small is currently generating about 0.14 per unit of risk. If you would invest  4,316  in General Motors on September 30, 2024 and sell it today you would earn a total of  1,112  from holding General Motors or generate 25.76% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy79.05%
ValuesDaily Returns

General Motors  vs.  Columbia Integrated Small

 Performance 
       Timeline  
General Motors 

Risk-Adjusted Performance

11 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in General Motors are ranked lower than 11 (%) 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.
Columbia Integrated Small 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Solid
Over the last 90 days Columbia Integrated Small has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly weak essential indicators, Columbia Integrated showed solid returns over the last few months and may actually be approaching a breakup point.

GM and Columbia Integrated Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with GM and Columbia Integrated

The main advantage of trading using opposite GM and Columbia Integrated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Columbia Integrated 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 Columbia Integrated will offset losses from the drop in Columbia Integrated's long position.
The idea behind General Motors and Columbia Integrated Small 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.

Other Complementary Tools

Stock Screener
Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook.
Aroon Oscillator
Analyze current equity momentum using Aroon Oscillator and other momentum ratios
Stock Tickers
Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites
Portfolio Optimization
Compute new portfolio that will generate highest expected return given your specified tolerance for risk
Portfolio Holdings
Check your current holdings and cash postion to detemine if your portfolio needs rebalancing