Correlation Between GM and Blockchain Group
Can any of the company-specific risk be diversified away by investing in both GM and Blockchain Group 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 Blockchain Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Blockchain Group SA, you can compare the effects of market volatilities on GM and Blockchain Group 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 Blockchain Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Blockchain Group.
Diversification Opportunities for GM and Blockchain Group
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GM and Blockchain is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Blockchain Group SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blockchain Group 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 Blockchain Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blockchain Group has no effect on the direction of GM i.e., GM and Blockchain Group go up and down completely randomly.
Pair Corralation between GM and Blockchain Group
Allowing for the 90-day total investment horizon GM is expected to generate 6.97 times less return on investment than Blockchain Group. But when comparing it to its historical volatility, General Motors is 5.3 times less risky than Blockchain Group. It trades about 0.28 of its potential returns per unit of risk. Blockchain Group SA is currently generating about 0.37 of returns per unit of risk over similar time horizon. If you would invest 14.00 in Blockchain Group SA on August 26, 2024 and sell it today you would earn a total of 15.00 from holding Blockchain Group SA or generate 107.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Blockchain Group SA
Performance |
| Timeline |
| General Motors |
| Blockchain Group |
GM and Blockchain Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Blockchain Group
The main advantage of trading using opposite GM and Blockchain Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Blockchain Group 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 Blockchain Group will offset losses from the drop in Blockchain Group's long position.The idea behind General Motors and Blockchain Group SA 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.| Blockchain Group vs. FNP Technologies SA | Blockchain Group vs. Manitou BF SA | Blockchain Group vs. Ossiam Minimum Variance | Blockchain Group vs. Granite 3x LVMH |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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