Correlation Between GM and Boston Partners
Can any of the company-specific risk be diversified away by investing in both GM and Boston Partners 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 Boston Partners into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Boston Partners Global, you can compare the effects of market volatilities on GM and Boston Partners 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 Boston Partners. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Boston Partners.
Diversification Opportunities for GM and Boston Partners
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GM and Boston is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Boston Partners Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boston Partners Global 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 Boston Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boston Partners Global has no effect on the direction of GM i.e., GM and Boston Partners go up and down completely randomly.
Pair Corralation between GM and Boston Partners
Allowing for the 90-day total investment horizon General Motors is expected to generate 3.25 times more return on investment than Boston Partners. However, GM is 3.25 times more volatile than Boston Partners Global. It trades about 0.13 of its potential returns per unit of risk. Boston Partners Global is currently generating about 0.03 per unit of risk. If you would invest 2,879 in General Motors on September 1, 2024 and sell it today you would earn a total of 2,680 from holding General Motors or generate 93.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Boston Partners Global
Performance |
| Timeline |
| General Motors |
| Boston Partners Global |
GM and Boston Partners Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Boston Partners
The main advantage of trading using opposite GM and Boston Partners positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Boston Partners 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 Boston Partners will offset losses from the drop in Boston Partners' long position.The idea behind General Motors and Boston Partners Global 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.| Boston Partners vs. Boston Partners Global | Boston Partners vs. Rbb Fund | Boston Partners vs. Boston Partners All Cap | Boston Partners vs. Boston Partners All Cap |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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