Correlation Between GM and Baird Small/mid
Can any of the company-specific risk be diversified away by investing in both GM and Baird Small/mid 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 Baird Small/mid into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Baird Smallmid Cap, you can compare the effects of market volatilities on GM and Baird Small/mid 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 Baird Small/mid. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Baird Small/mid.
Diversification Opportunities for GM and Baird Small/mid
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between GM and Baird is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Baird Smallmid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baird Smallmid Cap 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 Baird Small/mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baird Smallmid Cap has no effect on the direction of GM i.e., GM and Baird Small/mid go up and down completely randomly.
Pair Corralation between GM and Baird Small/mid
Allowing for the 90-day total investment horizon General Motors is expected to generate 1.91 times more return on investment than Baird Small/mid. However, GM is 1.91 times more volatile than Baird Smallmid Cap. It trades about 0.07 of its potential returns per unit of risk. Baird Smallmid Cap is currently generating about 0.04 per unit of risk. If you would invest 3,536 in General Motors on August 31, 2024 and sell it today you would earn a total of 2,023 from holding General Motors or generate 57.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.73% |
| Values | Daily Returns |
General Motors vs. Baird Smallmid Cap
Performance |
| Timeline |
| General Motors |
| Baird Smallmid Cap |
GM and Baird Small/mid Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Baird Small/mid
The main advantage of trading using opposite GM and Baird Small/mid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Baird Small/mid 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 Baird Small/mid will offset losses from the drop in Baird Small/mid's long position.The idea behind General Motors and Baird Smallmid Cap 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.| Baird Small/mid vs. T Rowe Price | Baird Small/mid vs. T Rowe Price | Baird Small/mid vs. T Rowe Price | Baird Small/mid vs. T Rowe Price |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
Other Complementary Tools
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. |