Correlation Between GM and BARINGS LATIN
Can any of the company-specific risk be diversified away by investing in both GM and BARINGS LATIN 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 LATIN 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 LATIN AMERICA, you can compare the effects of market volatilities on GM and BARINGS LATIN 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 LATIN. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and BARINGS LATIN.
Diversification Opportunities for GM and BARINGS LATIN
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GM and BARINGS is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and BARINGS LATIN AMERICA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BARINGS LATIN AMERICA 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 LATIN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BARINGS LATIN AMERICA has no effect on the direction of GM i.e., GM and BARINGS LATIN go up and down completely randomly.
Pair Corralation between GM and BARINGS LATIN
Allowing for the 90-day total investment horizon General Motors is expected to generate 1.73 times more return on investment than BARINGS LATIN. However, GM is 1.73 times more volatile than BARINGS LATIN AMERICA. It trades about 0.06 of its potential returns per unit of risk. BARINGS LATIN AMERICA is currently generating about -0.09 per unit of risk. If you would invest 3,283 in General Motors on September 12, 2024 and sell it today you would earn a total of 1,991 from holding General Motors or generate 60.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 42.22% |
| Values | Daily Returns |
General Motors vs. BARINGS LATIN AMERICA
Performance |
| Timeline |
| General Motors |
| BARINGS LATIN AMERICA |
GM and BARINGS LATIN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and BARINGS LATIN
The main advantage of trading using opposite GM and BARINGS LATIN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, BARINGS LATIN 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 LATIN will offset losses from the drop in BARINGS LATIN's long position.The idea behind General Motors and BARINGS LATIN AMERICA 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 LATIN vs. BARINGS DEVELOPED AND | BARINGS LATIN vs. BARINGS EASTERN EUROPE | BARINGS LATIN vs. Esfera Robotics R | BARINGS LATIN vs. R co Valor F |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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