Correlation Between GM and Vmoto

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

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

Diversification Opportunities for GM and Vmoto

-0.34

Correlation Coefficient

GM  Vmoto

Very good diversification

The 3 months correlation between GM and Vmoto is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Vmoto in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vmoto 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 Vmoto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vmoto has no effect on the direction of GM i.e., GM and Vmoto go up and down completely randomly.

Pair Corralation between GM and Vmoto

Allowing for the 90-day total investment horizon General Motors is expected to generate 0.41 times more return on investment than Vmoto. However, General Motors is 2.44 times less risky than Vmoto. It trades about 0.06 of its potential returns per unit of risk. Vmoto is currently generating about -0.15 per unit of risk. If you would invest  4,882  in General Motors on September 19, 2024 and sell it today you would earn a total of  283.50  from holding General Motors or generate 5.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	97.67%
Values	Daily Returns

General Motors  vs.  Vmoto

General Motors

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in General Motors are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very weak primary indicators, GM may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Vmoto

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vmoto has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with GM and Vmoto

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

The idea behind General Motors and Vmoto 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.