Correlation Between GM and WisdomTree STOXX
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By analyzing existing cross correlation between General Motors and WisdomTree STOXX Europe, you can compare the effects of market volatilities on GM and WisdomTree STOXX 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 WisdomTree STOXX. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and WisdomTree STOXX.
Diversification Opportunities for GM and WisdomTree STOXX
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GM and WisdomTree is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and WisdomTree STOXX Europe in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree STOXX Europe 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 WisdomTree STOXX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree STOXX Europe has no effect on the direction of GM i.e., GM and WisdomTree STOXX go up and down completely randomly.
Pair Corralation between GM and WisdomTree STOXX
Allowing for the 90-day total investment horizon General Motors is expected to generate 0.98 times more return on investment than WisdomTree STOXX. However, General Motors is 1.02 times less risky than WisdomTree STOXX. It trades about 0.12 of its potential returns per unit of risk. WisdomTree STOXX Europe is currently generating about -0.09 per unit of risk. If you would invest 4,571 in General Motors on September 26, 2024 and sell it today you would earn a total of 780.00 from holding General Motors or generate 17.06% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 98.44% |
Values | Daily Returns |
General Motors vs. WisdomTree STOXX Europe
Performance |
Timeline |
General Motors |
WisdomTree STOXX Europe |
GM and WisdomTree STOXX Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with GM and WisdomTree STOXX
The main advantage of trading using opposite GM and WisdomTree STOXX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, WisdomTree STOXX 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 WisdomTree STOXX will offset losses from the drop in WisdomTree STOXX's long position.The idea behind General Motors and WisdomTree STOXX Europe 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.WisdomTree STOXX vs. UBS Fund Solutions | WisdomTree STOXX vs. Xtrackers II | WisdomTree STOXX vs. Xtrackers Nikkei 225 | WisdomTree STOXX vs. iShares VII PLC |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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