Correlation Between GM and Calvert Ultra
Can any of the company-specific risk be diversified away by investing in both GM and Calvert Ultra 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 Calvert Ultra into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Calvert Ultra Short Income, you can compare the effects of market volatilities on GM and Calvert Ultra 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 Calvert Ultra. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Calvert Ultra.
Diversification Opportunities for GM and Calvert Ultra
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GM and Calvert is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Calvert Ultra Short Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Calvert Ultra Short 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 Calvert Ultra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Calvert Ultra Short has no effect on the direction of GM i.e., GM and Calvert Ultra go up and down completely randomly.
Pair Corralation between GM and Calvert Ultra
Allowing for the 90-day total investment horizon General Motors is expected to generate 26.83 times more return on investment than Calvert Ultra. However, GM is 26.83 times more volatile than Calvert Ultra Short Income. It trades about 0.1 of its potential returns per unit of risk. Calvert Ultra Short Income is currently generating about 0.11 per unit of risk. If you would invest 4,563 in General Motors on September 25, 2024 and sell it today you would earn a total of 618.00 from holding General Motors or generate 13.54% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
General Motors vs. Calvert Ultra Short Income
Performance |
Timeline |
General Motors |
Calvert Ultra Short |
GM and Calvert Ultra Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with GM and Calvert Ultra
The main advantage of trading using opposite GM and Calvert Ultra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Calvert Ultra 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 Calvert Ultra will offset losses from the drop in Calvert Ultra's long position.The idea behind General Motors and Calvert Ultra Short Income 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.Calvert Ultra vs. Calvert Short Duration | Calvert Ultra vs. Calvert Bond Portfolio | Calvert Ultra vs. Calvert Balanced Portfolio | Calvert Ultra vs. Calvert Long Term Income |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
Other Complementary Tools
Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated |