Correlation Between GM and Fu Burg
Can any of the company-specific risk be diversified away by investing in both GM and Fu Burg 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 Fu Burg into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Fu Burg Industrial, you can compare the effects of market volatilities on GM and Fu Burg 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 Fu Burg. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Fu Burg.
Diversification Opportunities for GM and Fu Burg
Very weak diversification
The 3 months correlation between GM and 8929 is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Fu Burg Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fu Burg Industrial 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 Fu Burg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fu Burg Industrial has no effect on the direction of GM i.e., GM and Fu Burg go up and down completely randomly.
Pair Corralation between GM and Fu Burg
Allowing for the 90-day total investment horizon GM is expected to generate 1.49 times less return on investment than Fu Burg. But when comparing it to its historical volatility, General Motors is 1.08 times less risky than Fu Burg. It trades about 0.04 of its potential returns per unit of risk. Fu Burg Industrial is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 2,095 in Fu Burg Industrial on September 1, 2024 and sell it today you would earn a total of 1,300 from holding Fu Burg Industrial or generate 62.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.02% |
| Values | Daily Returns |
General Motors vs. Fu Burg Industrial
Performance |
| Timeline |
| General Motors |
| Fu Burg Industrial |
GM and Fu Burg Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Fu Burg
The main advantage of trading using opposite GM and Fu Burg positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Fu Burg 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 Fu Burg will offset losses from the drop in Fu Burg's long position.The idea behind General Motors and Fu Burg Industrial 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.| Fu Burg vs. Central Reinsurance Corp | Fu Burg vs. Pacific Hospital Supply | Fu Burg vs. Phytohealth Corp | Fu Burg vs. RiTdisplay Corp |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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