Correlation Between GM and BOS Better
Can any of the company-specific risk be diversified away by investing in both GM and BOS Better 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 BOS Better into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and BOS Better Online, you can compare the effects of market volatilities on GM and BOS Better 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 BOS Better. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and BOS Better.
Diversification Opportunities for GM and BOS Better
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GM and BOS is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and BOS Better Online in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BOS Better Online 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 BOS Better. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BOS Better Online has no effect on the direction of GM i.e., GM and BOS Better go up and down completely randomly.
Pair Corralation between GM and BOS Better
Allowing for the 90-day total investment horizon GM is expected to generate 1.53 times less return on investment than BOS Better. In addition to that, GM is 2.03 times more volatile than BOS Better Online. It trades about 0.12 of its total potential returns per unit of risk. BOS Better Online is currently generating about 0.37 per unit of volatility. If you would invest 296.00 in BOS Better Online on August 31, 2024 and sell it today you would earn a total of 35.00 from holding BOS Better Online or generate 11.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. BOS Better Online
Performance |
| Timeline |
| General Motors |
| BOS Better Online |
GM and BOS Better Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and BOS Better
The main advantage of trading using opposite GM and BOS Better positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, BOS Better 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 BOS Better will offset losses from the drop in BOS Better's long position.The idea behind General Motors and BOS Better Online 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.| BOS Better vs. Mynaric AG ADR | BOS Better vs. Knowles Cor | BOS Better vs. Comtech Telecommunications Corp | BOS Better vs. Ituran Location and |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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