Correlation Between GM and Tiaa-cref Social

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Can any of the company-specific risk be diversified away by investing in both GM and Tiaa-cref Social 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 Social 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 Social Choice, you can compare the effects of market volatilities on GM and Tiaa-cref Social 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 Social. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Tiaa-cref Social.

Diversification Opportunities for GM and Tiaa-cref Social

0.7
  Correlation Coefficient

Poor diversification

The 3 months correlation between GM and Tiaa-cref is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Tiaa Cref Social Choice in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tiaa Cref Social 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 Social. 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 Social has no effect on the direction of GM i.e., GM and Tiaa-cref Social go up and down completely randomly.

Pair Corralation between GM and Tiaa-cref Social

Allowing for the 90-day total investment horizon General Motors is expected to generate 1.86 times more return on investment than Tiaa-cref Social. However, GM is 1.86 times more volatile than Tiaa Cref Social Choice. It trades about 0.05 of its potential returns per unit of risk. Tiaa Cref Social Choice is currently generating about 0.05 per unit of risk. If you would invest  3,515  in General Motors on September 11, 2024 and sell it today you would earn a total of  1,756  from holding General Motors or generate 49.96% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

General Motors  vs.  Tiaa Cref Social Choice

 Performance 
       Timeline  
General Motors 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in General Motors are ranked lower than 9 (%) 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 Social 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Tiaa Cref Social Choice has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Tiaa-cref Social 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 Social Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with GM and Tiaa-cref Social

The main advantage of trading using opposite GM and Tiaa-cref Social positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Tiaa-cref Social 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 Social will offset losses from the drop in Tiaa-cref Social's long position.
The idea behind General Motors and Tiaa Cref Social Choice 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.

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