Correlation Between GM and Tfa Quantitative

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

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

Diversification Opportunities for GM and Tfa Quantitative

0.62

Correlation Coefficient

GM  Tfa Quantitative

Poor diversification

The 3 months correlation between GM and Tfa is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Tfa Quantitative in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tfa Quantitative 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 Tfa Quantitative. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tfa Quantitative has no effect on the direction of GM i.e., GM and Tfa Quantitative go up and down completely randomly.

Pair Corralation between GM and Tfa Quantitative

Allowing for the 90-day total investment horizon General Motors is expected to under-perform the Tfa Quantitative. In addition to that, GM is 1.29 times more volatile than Tfa Quantitative. It trades about -0.07 of its total potential returns per unit of risk. Tfa Quantitative is currently generating about 0.1 per unit of volatility. If you would invest  1,128  in Tfa Quantitative on September 27, 2024 and sell it today you would earn a total of  24.00  from holding Tfa Quantitative or generate 2.13% return on investment over 90 days.

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

General Motors  vs.  Tfa Quantitative

General Motors

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in General Motors are ranked lower than 8 (%) 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.

Tfa Quantitative

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tfa Quantitative are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Tfa Quantitative is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with GM and Tfa Quantitative

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

The idea behind General Motors and Tfa Quantitative 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.