Correlation Between GM and Lsv Global

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

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

Diversification Opportunities for GM and Lsv Global

-0.46

Correlation Coefficient

GM  Lsv Global

Very good diversification

The 3 months correlation between GM and Lsv is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Lsv Global Managed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lsv Global Managed 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 Lsv Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lsv Global Managed has no effect on the direction of GM i.e., GM and Lsv Global go up and down completely randomly.

Pair Corralation between GM and Lsv Global

Allowing for the 90-day total investment horizon General Motors is expected to under-perform the Lsv Global. In addition to that, GM is 4.4 times more volatile than Lsv Global Managed. It trades about -0.01 of its total potential returns per unit of risk. Lsv Global Managed is currently generating about 0.18 per unit of volatility. If you would invest  1,017  in Lsv Global Managed on December 26, 2024 and sell it today you would earn a total of  62.00  from holding Lsv Global Managed or generate 6.1% return on investment over 90 days.

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

General Motors  vs.  Lsv Global Managed

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.

Lsv Global Managed

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Lsv Global Managed are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Lsv Global may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with GM and Lsv Global

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

The idea behind General Motors and Lsv Global Managed 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.