Correlation Between GM and Blackrock Midcap
Can any of the company-specific risk be diversified away by investing in both GM and Blackrock Midcap 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 Blackrock Midcap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Blackrock Midcap Index, you can compare the effects of market volatilities on GM and Blackrock Midcap 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 Blackrock Midcap. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Blackrock Midcap.
Diversification Opportunities for GM and Blackrock Midcap
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GM and Blackrock is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Blackrock Midcap Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Midcap Index 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 Blackrock Midcap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock Midcap Index has no effect on the direction of GM i.e., GM and Blackrock Midcap go up and down completely randomly.
Pair Corralation between GM and Blackrock Midcap
Allowing for the 90-day total investment horizon General Motors is expected to under-perform the Blackrock Midcap. In addition to that, GM is 3.52 times more volatile than Blackrock Midcap Index. It trades about -0.05 of its total potential returns per unit of risk. Blackrock Midcap Index is currently generating about 0.26 per unit of volatility. If you would invest 1,485 in Blackrock Midcap Index on November 3, 2024 and sell it today you would earn a total of 64.00 from holding Blackrock Midcap Index or generate 4.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
General Motors vs. Blackrock Midcap Index
Performance |
| Timeline |
| General Motors |
| Blackrock Midcap Index |
GM and Blackrock Midcap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Blackrock Midcap
The main advantage of trading using opposite GM and Blackrock Midcap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Blackrock Midcap 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 Blackrock Midcap will offset losses from the drop in Blackrock Midcap's long position.The idea behind General Motors and Blackrock Midcap Index 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.| Blackrock Midcap vs. Blackrock Small Cap | Blackrock Midcap vs. Blackrock International Index | Blackrock Midcap vs. Blackrock Sp 500 | Blackrock Midcap vs. Blackrock Total Bond |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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