Correlation Between GM and Bio Rad
Can any of the company-specific risk be diversified away by investing in both GM and Bio Rad 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 Bio Rad into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Bio Rad Laboratories, you can compare the effects of market volatilities on GM and Bio Rad 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 Bio Rad. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Bio Rad.
Diversification Opportunities for GM and Bio Rad
Excellent diversification
The 3 months correlation between GM and Bio is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Bio Rad Laboratories in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bio Rad Laboratories 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 Bio Rad. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bio Rad Laboratories has no effect on the direction of GM i.e., GM and Bio Rad go up and down completely randomly.
Pair Corralation between GM and Bio Rad
Allowing for the 90-day total investment horizon GM is expected to generate 362.49 times less return on investment than Bio Rad. But when comparing it to its historical volatility, General Motors is 119.5 times less risky than Bio Rad. It trades about 0.1 of its potential returns per unit of risk. Bio Rad Laboratories is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 0.00 in Bio Rad Laboratories on September 2, 2024 and sell it today you would earn a total of 33,600 from holding Bio Rad Laboratories or generate 9.223372036854776E16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 17.19% |
| Values | Daily Returns |
General Motors vs. Bio Rad Laboratories
Performance |
| Timeline |
| General Motors |
| Bio Rad Laboratories |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Solid
GM and Bio Rad Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Bio Rad
The main advantage of trading using opposite GM and Bio Rad positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Bio Rad 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 Bio Rad will offset losses from the drop in Bio Rad's long position.The idea behind General Motors and Bio Rad Laboratories 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.| Bio Rad vs. Profound Medical Corp | Bio Rad vs. Si Bone | Bio Rad vs. Nevro Corp | Bio Rad vs. Orthopediatrics 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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