Correlation Between GM and Us Strategic

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

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

Diversification Opportunities for GM and Us Strategic

0.58

Correlation Coefficient

GM  Us Strategic

Very weak diversification

The 3 months correlation between GM and RUSTX is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Us Strategic Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Us Strategic Equity 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 Us Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Us Strategic Equity has no effect on the direction of GM i.e., GM and Us Strategic go up and down completely randomly.

Pair Corralation between GM and Us Strategic

Allowing for the 90-day total investment horizon General Motors is expected to generate 2.13 times more return on investment than Us Strategic. However, GM is 2.13 times more volatile than Us Strategic Equity. It trades about 0.03 of its potential returns per unit of risk. Us Strategic Equity is currently generating about 0.07 per unit of risk. If you would invest  3,792  in General Motors on November 20, 2024 and sell it today you would earn a total of  1,045  from holding General Motors or generate 27.56% return on investment over 90 days.

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

General Motors  vs.  Us Strategic Equity

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.

Us Strategic Equity

Risk-Adjusted Performance

Very Weak

Over the last 90 days Us Strategic Equity has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic 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 Us Strategic

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

The idea behind General Motors and Us Strategic Equity 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..