Correlation Between GM and Pioneer Fundamental
Can any of the company-specific risk be diversified away by investing in both GM and Pioneer Fundamental 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 Fundamental 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 Fundamental Growth, you can compare the effects of market volatilities on GM and Pioneer Fundamental 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 Fundamental. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Pioneer Fundamental.
Diversification Opportunities for GM and Pioneer Fundamental
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between GM and Pioneer is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Pioneer Fundamental Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pioneer Fundamental 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 Fundamental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pioneer Fundamental has no effect on the direction of GM i.e., GM and Pioneer Fundamental go up and down completely randomly.
Pair Corralation between GM and Pioneer Fundamental
Allowing for the 90-day total investment horizon General Motors is expected to generate 2.55 times more return on investment than Pioneer Fundamental. However, GM is 2.55 times more volatile than Pioneer Fundamental Growth. It trades about 0.1 of its potential returns per unit of risk. Pioneer Fundamental Growth is currently generating about -0.01 per unit of risk. If you would invest 4,602 in General Motors on September 12, 2024 and sell it today you would earn a total of 672.00 from holding General Motors or generate 14.6% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 98.44% |
Values | Daily Returns |
General Motors vs. Pioneer Fundamental Growth
Performance |
Timeline |
General Motors |
Pioneer Fundamental |
GM and Pioneer Fundamental Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with GM and Pioneer Fundamental
The main advantage of trading using opposite GM and Pioneer Fundamental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Pioneer Fundamental 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 Fundamental will offset losses from the drop in Pioneer Fundamental's long position.The idea behind General Motors and Pioneer Fundamental Growth 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.Pioneer Fundamental vs. Franklin Natural Resources | Pioneer Fundamental vs. Adams Natural Resources | Pioneer Fundamental vs. Energy Basic Materials | Pioneer Fundamental vs. Gamco Natural Resources |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
Other Complementary Tools
Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
Commodity Directory Find actively traded commodities issued by global exchanges |