Correlation Between GM and Nuveen NASDAQ

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Can any of the company-specific risk be diversified away by investing in both GM and Nuveen NASDAQ 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 Nuveen NASDAQ into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Nuveen NASDAQ 100, you can compare the effects of market volatilities on GM and Nuveen NASDAQ 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 Nuveen NASDAQ. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Nuveen NASDAQ.

Diversification Opportunities for GM and Nuveen NASDAQ

0.54
  Correlation Coefficient

Very weak diversification

The 3 months correlation between GM and Nuveen is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Nuveen NASDAQ 100 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen NASDAQ 100 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 Nuveen NASDAQ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen NASDAQ 100 has no effect on the direction of GM i.e., GM and Nuveen NASDAQ go up and down completely randomly.

Pair Corralation between GM and Nuveen NASDAQ

Allowing for the 90-day total investment horizon General Motors is expected to generate 3.13 times more return on investment than Nuveen NASDAQ. However, GM is 3.13 times more volatile than Nuveen NASDAQ 100. It trades about 0.06 of its potential returns per unit of risk. Nuveen NASDAQ 100 is currently generating about 0.16 per unit of risk. If you would invest  4,793  in General Motors on September 22, 2024 and sell it today you would earn a total of  388.00  from holding General Motors or generate 8.1% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy98.46%
ValuesDaily Returns

General Motors  vs.  Nuveen NASDAQ 100

 Performance 
       Timeline  
General Motors 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in General Motors are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating primary indicators, GM may actually be approaching a critical reversion point that can send shares even higher in January 2025.
Nuveen NASDAQ 100 

Risk-Adjusted Performance

12 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Nuveen NASDAQ 100 are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Nuveen NASDAQ may actually be approaching a critical reversion point that can send shares even higher in January 2025.

GM and Nuveen NASDAQ Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with GM and Nuveen NASDAQ

The main advantage of trading using opposite GM and Nuveen NASDAQ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Nuveen NASDAQ 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 Nuveen NASDAQ will offset losses from the drop in Nuveen NASDAQ's long position.
The idea behind General Motors and Nuveen NASDAQ 100 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.

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