Correlation Between GM and Sanarco Funds

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

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

Diversification Opportunities for GM and Sanarco Funds

0.0

Correlation Coefficient

GM  Sanarco Funds

Pay attention - limited upside

The 3 months correlation between GM and Sanarco is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Sanarco Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sanarco Funds 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 Sanarco Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sanarco Funds has no effect on the direction of GM i.e., GM and Sanarco Funds go up and down completely randomly.

Pair Corralation between GM and Sanarco Funds

If you would invest  5,261  in General Motors on September 26, 2024 and sell it today you would earn a total of  90.00  from holding General Motors or generate 1.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	2.44%
Values	Daily Returns

General Motors  vs.  Sanarco Funds

General Motors

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in General Motors are ranked lower than 9 (%) 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.

Sanarco Funds

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sanarco Funds has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, Sanarco Funds is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with GM and Sanarco Funds

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

The idea behind General Motors and Sanarco Funds 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.

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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.