Correlation Between GM and Pioneer Core

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

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

Diversification Opportunities for GM and Pioneer Core

0.54

Correlation Coefficient

GM  Pioneer Core

Very weak diversification

The 3 months correlation between GM and Pioneer is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Pioneer Core Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pioneer Core Equity 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 Pioneer Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pioneer Core Equity has no effect on the direction of GM i.e., GM and Pioneer Core go up and down completely randomly.

Pair Corralation between GM and Pioneer Core

Allowing for the 90-day total investment horizon General Motors is expected to generate 2.62 times more return on investment than Pioneer Core. However, GM is 2.62 times more volatile than Pioneer Core Equity. It trades about 0.07 of its potential returns per unit of risk. Pioneer Core Equity is currently generating about -0.03 per unit of risk. If you would invest  4,796  in General Motors on September 24, 2024 and sell it today you would earn a total of  460.00  from holding General Motors or generate 9.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

General Motors  vs.  Pioneer Core Equity

General Motors

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in General Motors are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very weak primary indicators, GM may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pioneer Core Equity

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pioneer Core Equity has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Pioneer Core 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 Pioneer Core

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

The idea behind General Motors and Pioneer Core Equity 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.