Correlation Between GM and Baird Aggregate
Can any of the company-specific risk be diversified away by investing in both GM and Baird Aggregate 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 Baird Aggregate into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Baird Aggregate Bond, you can compare the effects of market volatilities on GM and Baird Aggregate 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 Baird Aggregate. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Baird Aggregate.
Diversification Opportunities for GM and Baird Aggregate
-0.82 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GM and Baird is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Baird Aggregate Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baird Aggregate Bond 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 Baird Aggregate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baird Aggregate Bond has no effect on the direction of GM i.e., GM and Baird Aggregate go up and down completely randomly.
Pair Corralation between GM and Baird Aggregate
Allowing for the 90-day total investment horizon General Motors is expected to generate 5.12 times more return on investment than Baird Aggregate. However, GM is 5.12 times more volatile than Baird Aggregate Bond. It trades about 0.05 of its potential returns per unit of risk. Baird Aggregate Bond is currently generating about 0.04 per unit of risk. If you would invest 3,757 in General Motors on August 30, 2024 and sell it today you would earn a total of 1,793 from holding General Motors or generate 47.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Baird Aggregate Bond
Performance |
| Timeline |
| General Motors |
| Baird Aggregate Bond |
GM and Baird Aggregate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Baird Aggregate
The main advantage of trading using opposite GM and Baird Aggregate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Baird Aggregate 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 Baird Aggregate will offset losses from the drop in Baird Aggregate's long position.The idea behind General Motors and Baird Aggregate Bond 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.| Baird Aggregate vs. Merck Company | Baird Aggregate vs. Pharvaris BV | Baird Aggregate vs. Brinker International | Baird Aggregate vs. Alcoa 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
Other Complementary Tools
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Stocks Directory Find actively traded stocks across global markets |