Correlation Between GM and BA Airport
Can any of the company-specific risk be diversified away by investing in both GM and BA Airport 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 BA Airport into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and BA Airport Leasehold, you can compare the effects of market volatilities on GM and BA Airport 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 BA Airport. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and BA Airport.
Diversification Opportunities for GM and BA Airport
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between GM and BAREIT is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and BA Airport Leasehold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BA Airport Leasehold 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 BA Airport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BA Airport Leasehold has no effect on the direction of GM i.e., GM and BA Airport go up and down completely randomly.
Pair Corralation between GM and BA Airport
Allowing for the 90-day total investment horizon General Motors is expected to generate 3.01 times more return on investment than BA Airport. However, GM is 3.01 times more volatile than BA Airport Leasehold. It trades about 0.1 of its potential returns per unit of risk. BA Airport Leasehold is currently generating about 0.06 per unit of risk. If you would invest 4,829 in General Motors on September 2, 2024 and sell it today you would earn a total of 730.00 from holding General Motors or generate 15.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. BA Airport Leasehold
Performance |
| Timeline |
| General Motors |
| BA Airport Leasehold |
GM and BA Airport Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and BA Airport
The main advantage of trading using opposite GM and BA Airport positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, BA Airport 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 BA Airport will offset losses from the drop in BA Airport's long position.The idea behind General Motors and BA Airport Leasehold 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.| BA Airport vs. LH Shopping Centers | BA Airport vs. HEMARAJ INDUSTRIAL PROPERTY | BA Airport vs. Land and Houses |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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