Correlation Between GM and Bion Environmental
Can any of the company-specific risk be diversified away by investing in both GM and Bion Environmental 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 Bion Environmental into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Bion Environmental Technologies, you can compare the effects of market volatilities on GM and Bion Environmental 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 Bion Environmental. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Bion Environmental.
Diversification Opportunities for GM and Bion Environmental
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between GM and Bion is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Bion Environmental Technologie in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bion Environmental 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 Bion Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bion Environmental has no effect on the direction of GM i.e., GM and Bion Environmental go up and down completely randomly.
Pair Corralation between GM and Bion Environmental
Allowing for the 90-day total investment horizon GM is expected to generate 1.32 times less return on investment than Bion Environmental. But when comparing it to its historical volatility, General Motors is 3.33 times less risky than Bion Environmental. It trades about 0.1 of its potential returns per unit of risk. Bion Environmental Technologies is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 22.00 in Bion Environmental Technologies on September 2, 2024 and sell it today you would earn a total of 0.00 from holding Bion Environmental Technologies or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Bion Environmental Technologie
Performance |
| Timeline |
| General Motors |
| Bion Environmental |
GM and Bion Environmental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Bion Environmental
The main advantage of trading using opposite GM and Bion Environmental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Bion Environmental 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 Bion Environmental will offset losses from the drop in Bion Environmental's long position.The idea behind General Motors and Bion Environmental Technologies 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.| Bion Environmental vs. Seychelle Environmtl | Bion Environmental vs. Eestech | Bion Environmental vs. Energy and Water | Bion Environmental vs. One World Universe |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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