Correlation Between GM and Bbh Income
Can any of the company-specific risk be diversified away by investing in both GM and Bbh Income 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 Bbh Income into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Bbh Income Fund, you can compare the effects of market volatilities on GM and Bbh Income 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 Bbh Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Bbh Income.
Diversification Opportunities for GM and Bbh Income
-0.85 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GM and Bbh is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Bbh Income Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bbh Income Fund 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 Bbh Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bbh Income Fund has no effect on the direction of GM i.e., GM and Bbh Income go up and down completely randomly.
Pair Corralation between GM and Bbh Income
Allowing for the 90-day total investment horizon General Motors is expected to generate 7.2 times more return on investment than Bbh Income. However, GM is 7.2 times more volatile than Bbh Income Fund. It trades about 0.08 of its potential returns per unit of risk. Bbh Income Fund is currently generating about 0.09 per unit of risk. If you would invest 4,551 in General Motors on August 30, 2024 and sell it today you would earn a total of 999.00 from holding General Motors or generate 21.95% 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. Bbh Income Fund
Performance |
| Timeline |
| General Motors |
| Bbh Income Fund |
GM and Bbh Income Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Bbh Income
The main advantage of trading using opposite GM and Bbh Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Bbh Income 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 Bbh Income will offset losses from the drop in Bbh Income's long position.The idea behind General Motors and Bbh Income Fund 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.| Bbh Income vs. Advent Claymore Convertible | Bbh Income vs. Lord Abbett Convertible | Bbh Income vs. Rationalpier 88 Convertible | Bbh Income vs. Putnam Convertible Incm Gwth |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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