Correlation Between GM and Virtus Tactical

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

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

Diversification Opportunities for GM and Virtus Tactical

0.45

Correlation Coefficient

GM  Virtus Tactical

Very weak diversification

The 3 months correlation between GM and Virtus is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Virtus Tactical Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus Tactical Allo 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 Virtus Tactical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus Tactical Allo has no effect on the direction of GM i.e., GM and Virtus Tactical go up and down completely randomly.

Pair Corralation between GM and Virtus Tactical

Allowing for the 90-day total investment horizon General Motors is expected to generate 2.14 times more return on investment than Virtus Tactical. However, GM is 2.14 times more volatile than Virtus Tactical Allocation. It trades about 0.01 of its potential returns per unit of risk. Virtus Tactical Allocation is currently generating about -0.05 per unit of risk. If you would invest  4,703  in General Motors on December 5, 2024 and sell it today you would earn a total of  0.00  from holding General Motors or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.37%
Values	Daily Returns

General Motors  vs.  Virtus Tactical Allocation

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 latest weak performance, the Stock's primary indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Virtus Tactical Allo

Risk-Adjusted Performance

Very Weak

Over the last 90 days Virtus Tactical Allocation has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with GM and Virtus Tactical

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

The idea behind General Motors and Virtus Tactical Allocation 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.