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 Emerging, 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
-0.81 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GM and Boston is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Boston Partners Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boston Partners Emerging 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 Emerging 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 2.64 times more return on investment than Boston Partners. However, GM is 2.64 times more volatile than Boston Partners Emerging. It trades about 0.05 of its potential returns per unit of risk. Boston Partners Emerging is currently generating about 0.05 per unit of risk. If you would invest 3,805 in General Motors on September 3, 2024 and sell it today you would earn a total of 1,754 from holding General Motors or generate 46.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 86.46% |
| Values | Daily Returns |
General Motors vs. Boston Partners Emerging
Performance |
| Timeline |
| General Motors |
| Boston Partners Emerging |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
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 Emerging 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. Balanced Fund Investor | Boston Partners vs. Growth Strategy Fund | Boston Partners vs. Auer Growth Fund | Boston Partners vs. Omni Small Cap Value |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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