Correlation Between GM and Verus International

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

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

Diversification Opportunities for GM and Verus International

0.0

Correlation Coefficient

GM  Verus International

Pay attention - limited upside

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

Pair Corralation between GM and Verus International

If you would invest  0.01  in Verus International on September 15, 2024 and sell it today you would earn a total of  0.00  from holding Verus International or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

General Motors  vs.  Verus International

General Motors

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in General Motors are ranked lower than 6 (%) 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.

Verus International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Verus International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Verus International is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with GM and Verus International

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

The idea behind General Motors and Verus International 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.