Correlation Between GM and Tiaa-cref Emerging

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Can any of the company-specific risk be diversified away by investing in both GM and Tiaa-cref Emerging 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 Tiaa-cref Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Tiaa Cref Emerging Markets, you can compare the effects of market volatilities on GM and Tiaa-cref Emerging 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 Tiaa-cref Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Tiaa-cref Emerging.

Diversification Opportunities for GM and Tiaa-cref Emerging

-0.28
  Correlation Coefficient

Very good diversification

The 3 months correlation between GM and Tiaa-cref is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Tiaa Cref Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tiaa Cref Emerging 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 Tiaa-cref Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tiaa Cref Emerging has no effect on the direction of GM i.e., GM and Tiaa-cref Emerging go up and down completely randomly.

Pair Corralation between GM and Tiaa-cref Emerging

Allowing for the 90-day total investment horizon General Motors is expected to generate 11.6 times more return on investment than Tiaa-cref Emerging. However, GM is 11.6 times more volatile than Tiaa Cref Emerging Markets. It trades about 0.09 of its potential returns per unit of risk. Tiaa Cref Emerging Markets is currently generating about 0.11 per unit of risk. If you would invest  4,714  in General Motors on September 6, 2024 and sell it today you would earn a total of  622.00  from holding General Motors or generate 13.19% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

General Motors  vs.  Tiaa Cref Emerging Markets

 Performance 
       Timeline  
General Motors 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in General Motors are ranked lower than 7 (%) 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.
Tiaa Cref Emerging 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Tiaa Cref Emerging Markets are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Tiaa-cref Emerging is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

GM and Tiaa-cref Emerging Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with GM and Tiaa-cref Emerging

The main advantage of trading using opposite GM and Tiaa-cref Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Tiaa-cref Emerging 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 Tiaa-cref Emerging will offset losses from the drop in Tiaa-cref Emerging's long position.
The idea behind General Motors and Tiaa Cref Emerging Markets 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.

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