Correlation Between GM and Bull Trading
Can any of the company-specific risk be diversified away by investing in both GM and Bull Trading 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 Bull Trading into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Bull Trading And, you can compare the effects of market volatilities on GM and Bull Trading 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 Bull Trading. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Bull Trading.
Diversification Opportunities for GM and Bull Trading
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GM and Bull is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Bull Trading And in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bull Trading And 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 Bull Trading. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bull Trading And has no effect on the direction of GM i.e., GM and Bull Trading go up and down completely randomly.
Pair Corralation between GM and Bull Trading
Allowing for the 90-day total investment horizon General Motors is expected to generate 0.6 times more return on investment than Bull Trading. However, General Motors is 1.67 times less risky than Bull Trading. It trades about 0.07 of its potential returns per unit of risk. Bull Trading And is currently generating about -0.16 per unit of risk. If you would invest 5,273 in General Motors on August 29, 2024 and sell it today you would earn a total of 206.00 from holding General Motors or generate 3.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 81.82% |
| Values | Daily Returns |
General Motors vs. Bull Trading And
Performance |
| Timeline |
| General Motors |
| Bull Trading And |
GM and Bull Trading Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Bull Trading
The main advantage of trading using opposite GM and Bull Trading positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Bull Trading 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 Bull Trading will offset losses from the drop in Bull Trading's long position.The idea behind General Motors and Bull Trading And 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.| Bull Trading vs. Victory Supermarket Chain | Bull Trading vs. Abra Information Technologies | Bull Trading vs. Multi Retail Group | Bull Trading vs. Opko Health |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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