Correlation Between GM and Tortoise
Can any of the company-specific risk be diversified away by investing in both GM and Tortoise 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 Tortoise into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Tortoise, you can compare the effects of market volatilities on GM and Tortoise 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 Tortoise. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Tortoise.
Diversification Opportunities for GM and Tortoise
Very poor diversification
The 3 months correlation between GM and Tortoise is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Tortoise in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tortoise 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 Tortoise. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tortoise has no effect on the direction of GM i.e., GM and Tortoise go up and down completely randomly.
Pair Corralation between GM and Tortoise
If you would invest 4,394 in General Motors on February 10, 2024 and sell it today you would earn a total of 127.00 from holding General Motors or generate 2.89% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 4.35% |
Values | Daily Returns |
General Motors vs. Tortoise
Performance |
Timeline |
General Motors |
Tortoise |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
GM and Tortoise Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with GM and Tortoise
The main advantage of trading using opposite GM and Tortoise positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Tortoise 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 Tortoise will offset losses from the drop in Tortoise's long position.The idea behind General Motors and Tortoise 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.Tortoise vs. Invesco Solar ETF | Tortoise vs. Albemarle Corp | Tortoise vs. Lithium Americas Corp | Tortoise vs. iShares Global Clean |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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