Correlation Between GM and Moneta Money

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

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

Diversification Opportunities for GM and Moneta Money

0.86

Correlation Coefficient

GM  Moneta Money

Very poor diversification

The 3 months correlation between GM and Moneta is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Moneta Money Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Moneta Money Bank 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 Moneta Money. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Moneta Money Bank has no effect on the direction of GM i.e., GM and Moneta Money go up and down completely randomly.

Pair Corralation between GM and Moneta Money

Allowing for the 90-day total investment horizon General Motors is expected to generate 2.0 times more return on investment than Moneta Money. However, GM is 2.0 times more volatile than Moneta Money Bank. It trades about 0.1 of its potential returns per unit of risk. Moneta Money Bank is currently generating about 0.17 per unit of risk. If you would invest  4,829  in General Motors on August 31, 2024 and sell it today you would earn a total of  721.00  from holding General Motors or generate 14.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

General Motors  vs.  Moneta Money Bank

General Motors

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in General Motors are ranked lower than 7 (%) 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.

Moneta Money Bank

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Moneta Money Bank are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Moneta Money reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GM and Moneta Money

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

The idea behind General Motors and Moneta Money Bank 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.