Correlation Between GM and Broadex Technologies
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By analyzing existing cross correlation between General Motors and Broadex Technologies Co, you can compare the effects of market volatilities on GM and Broadex Technologies 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 Broadex Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Broadex Technologies.
Diversification Opportunities for GM and Broadex Technologies
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GM and Broadex is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Broadex Technologies Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Broadex Technologies 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 Broadex Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Broadex Technologies has no effect on the direction of GM i.e., GM and Broadex Technologies go up and down completely randomly.
Pair Corralation between GM and Broadex Technologies
Allowing for the 90-day total investment horizon General Motors is expected to generate 0.89 times more return on investment than Broadex Technologies. However, General Motors is 1.13 times less risky than Broadex Technologies. It trades about 0.17 of its potential returns per unit of risk. Broadex Technologies Co is currently generating about -0.19 per unit of risk. If you would invest 5,076 in General Motors on September 1, 2024 and sell it today you would earn a total of 483.00 from holding General Motors or generate 9.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
General Motors vs. Broadex Technologies Co
Performance |
| Timeline |
| General Motors |
| Broadex Technologies |
GM and Broadex Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Broadex Technologies
The main advantage of trading using opposite GM and Broadex Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Broadex Technologies 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 Broadex Technologies will offset losses from the drop in Broadex Technologies' long position.The idea behind General Motors and Broadex Technologies Co 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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