Correlation Between GM and Carillon Reams

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

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

Diversification Opportunities for GM and Carillon Reams

0.0

Correlation Coefficient

GM  Carillon Reams

Pay attention - limited upside

The 3 months correlation between GM and Carillon is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Carillon Reams Core in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carillon Reams Core 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 Carillon Reams. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carillon Reams Core has no effect on the direction of GM i.e., GM and Carillon Reams go up and down completely randomly.

Pair Corralation between GM and Carillon Reams

If you would invest  4,478  in General Motors on October 1, 2024 and sell it today you would earn a total of  950.00  from holding General Motors or generate 21.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.59%
Values	Daily Returns

General Motors  vs.  Carillon Reams Core

General Motors

Risk-Adjusted Performance

11 of 100

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.

Carillon Reams Core

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Carillon Reams Core has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Carillon Reams 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 Carillon Reams

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

The idea behind General Motors and Carillon Reams Core 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.