Correlation Between GM and Vy Invesco

Can any of the company-specific risk be diversified away by investing in both GM and Vy Invesco 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 Invesco 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 Invesco Growth, you can compare the effects of market volatilities on GM and Vy Invesco 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 Invesco. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Vy Invesco.

Diversification Opportunities for GM and Vy Invesco

-0.04

Correlation Coefficient

GM  Vy Invesco

Good diversification

The 3 months correlation between GM and IVGAX is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Vy Invesco Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vy Invesco Growth 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 Invesco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vy Invesco Growth has no effect on the direction of GM i.e., GM and Vy Invesco go up and down completely randomly.

Pair Corralation between GM and Vy Invesco

Allowing for the 90-day total investment horizon GM is expected to generate 8.58 times less return on investment than Vy Invesco. In addition to that, GM is 2.87 times more volatile than Vy Invesco Growth. It trades about 0.0 of its total potential returns per unit of risk. Vy Invesco Growth is currently generating about 0.02 per unit of volatility. If you would invest  2,161  in Vy Invesco Growth on December 18, 2024 and sell it today you would earn a total of  16.00  from holding Vy Invesco Growth or generate 0.74% return on investment over 90 days.

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

General Motors  vs.  Vy Invesco Growth

General Motors

Risk-Adjusted Performance

Very Weak

Over the last 90 days General Motors has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy primary indicators, GM is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Vy Invesco Growth

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Vy Invesco Growth are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Vy Invesco is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with GM and Vy Invesco

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

The idea behind General Motors and Vy Invesco Growth 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.