Correlation Between GM and Resource Real
Can any of the company-specific risk be diversified away by investing in both GM and Resource Real 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 Resource Real into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Resource Real Estate, you can compare the effects of market volatilities on GM and Resource Real 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 Resource Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Resource Real.
Diversification Opportunities for GM and Resource Real
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GM and Resource is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Resource Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Resource Real Estate 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 Resource Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Resource Real Estate has no effect on the direction of GM i.e., GM and Resource Real go up and down completely randomly.
Pair Corralation between GM and Resource Real
If you would invest (100.00) in Resource Real Estate on October 23, 2024 and sell it today you would earn a total of 100.00 from holding Resource Real Estate or generate -100.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Flat |
Strength | Insignificant |
Accuracy | 0.0% |
Values | Daily Returns |
General Motors vs. Resource Real Estate
Performance |
Timeline |
General Motors |
Resource Real Estate |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
GM and Resource Real Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with GM and Resource Real
The main advantage of trading using opposite GM and Resource Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Resource Real 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 Resource Real will offset losses from the drop in Resource Real's long position.The idea behind General Motors and Resource Real Estate 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.Resource Real vs. Invesco Energy Fund | Resource Real vs. Adams Natural Resources | Resource Real vs. World Energy Fund | Resource Real vs. Oil Gas Ultrasector |
Check out your portfolio center.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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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