Correlation Between GM and Barings Global
Can any of the company-specific risk be diversified away by investing in both GM and Barings Global 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 Barings Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Barings Global Floating, you can compare the effects of market volatilities on GM and Barings Global 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 Barings Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Barings Global.
Diversification Opportunities for GM and Barings Global
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GM and Barings is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Barings Global Floating in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barings Global Floating 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 Barings Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barings Global Floating has no effect on the direction of GM i.e., GM and Barings Global go up and down completely randomly.
Pair Corralation between GM and Barings Global
If you would invest 5,273 in General Motors on August 28, 2024 and sell it today you would earn a total of 747.00 from holding General Motors or generate 14.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 0.0% |
| Values | Daily Returns |
General Motors vs. Barings Global Floating
Performance |
| Timeline |
| General Motors |
| Barings Global Floating |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Solid
GM and Barings Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Barings Global
The main advantage of trading using opposite GM and Barings Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Barings Global 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 Barings Global will offset losses from the drop in Barings Global's long position.The idea behind General Motors and Barings Global Floating 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.| Barings Global vs. Gamco Natural Resources | Barings Global vs. The Gold Bullion | Barings Global vs. Gabelli Gold Fund | Barings Global vs. Global Gold Fund |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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