Correlation Between GM and VanEck Vectors

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

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

Diversification Opportunities for GM and VanEck Vectors

-0.39

Correlation Coefficient

GM  VanEck Vectors

Very good diversification

The 3 months correlation between GM and VanEck is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and VanEck Vectors Morningstar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Vectors Morni 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 VanEck Vectors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Vectors Morni has no effect on the direction of GM i.e., GM and VanEck Vectors go up and down completely randomly.

Pair Corralation between GM and VanEck Vectors

Allowing for the 90-day total investment horizon General Motors is expected to under-perform the VanEck Vectors. But the stock apears to be less risky and, when comparing its historical volatility, General Motors is 1.08 times less risky than VanEck Vectors. The stock trades about -0.15 of its potential returns per unit of risk. The VanEck Vectors Morningstar is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  645.00  in VanEck Vectors Morningstar on September 15, 2024 and sell it today you would lose (2.00) from holding VanEck Vectors Morningstar or give up 0.31% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

General Motors  vs.  VanEck Vectors Morningstar

General Motors

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in General Motors are ranked lower than 6 (%) 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.

VanEck Vectors Morni

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VanEck Vectors Morningstar has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, VanEck Vectors is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with GM and VanEck Vectors

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

The idea behind General Motors and VanEck Vectors Morningstar 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.