Correlation Between GM and Burgerfi International
Can any of the company-specific risk be diversified away by investing in both GM and Burgerfi International 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 Burgerfi International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Burgerfi International, you can compare the effects of market volatilities on GM and Burgerfi International 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 Burgerfi International. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Burgerfi International.
Diversification Opportunities for GM and Burgerfi International
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GM and Burgerfi is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Burgerfi International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Burgerfi International 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 Burgerfi International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Burgerfi International has no effect on the direction of GM i.e., GM and Burgerfi International go up and down completely randomly.
Pair Corralation between GM and Burgerfi International
Allowing for the 90-day total investment horizon GM is expected to generate 1.14 times less return on investment than Burgerfi International. But when comparing it to its historical volatility, General Motors is 12.24 times less risky than Burgerfi International. It trades about 0.1 of its potential returns per unit of risk. Burgerfi International is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 14.00 in Burgerfi International on September 2, 2024 and sell it today you would lose (5.70) from holding Burgerfi International or give up 40.71% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 23.44% |
| Values | Daily Returns |
General Motors vs. Burgerfi International
Performance |
| Timeline |
| General Motors |
| Burgerfi International |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
GM and Burgerfi International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Burgerfi International
The main advantage of trading using opposite GM and Burgerfi International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Burgerfi International 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 Burgerfi International will offset losses from the drop in Burgerfi International's long position.The idea behind General Motors and Burgerfi International 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.| Burgerfi International vs. FAT Brands | Burgerfi International vs. FAT Brands | Burgerfi International vs. Brinker International | Burgerfi International vs. Jack In The |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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