Correlation Between GM and Blue Ridge
Can any of the company-specific risk be diversified away by investing in both GM and Blue Ridge 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 Blue Ridge into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Blue Ridge Bankshares, you can compare the effects of market volatilities on GM and Blue Ridge 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 Blue Ridge. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Blue Ridge.
Diversification Opportunities for GM and Blue Ridge
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between GM and Blue is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Blue Ridge Bankshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blue Ridge Bankshares 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 Blue Ridge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blue Ridge Bankshares has no effect on the direction of GM i.e., GM and Blue Ridge go up and down completely randomly.
Pair Corralation between GM and Blue Ridge
Allowing for the 90-day total investment horizon General Motors is expected to under-perform the Blue Ridge. In addition to that, GM is 1.21 times more volatile than Blue Ridge Bankshares. It trades about -0.34 of its total potential returns per unit of risk. Blue Ridge Bankshares is currently generating about 0.18 per unit of volatility. If you would invest 337.00 in Blue Ridge Bankshares on November 27, 2024 and sell it today you would earn a total of 23.00 from holding Blue Ridge Bankshares or generate 6.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Blue Ridge Bankshares
Performance |
| Timeline |
| General Motors |
| Blue Ridge Bankshares |
GM and Blue Ridge Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Blue Ridge
The main advantage of trading using opposite GM and Blue Ridge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Blue Ridge 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 Blue Ridge will offset losses from the drop in Blue Ridge's long position.The idea behind General Motors and Blue Ridge Bankshares 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.| Blue Ridge vs. LINKBANCORP | Blue Ridge vs. Colony Bankcorp | Blue Ridge vs. Bankwell Financial Group | Blue Ridge vs. ECB Bancorp |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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