Correlation Between GM and Customers Bancorp
Can any of the company-specific risk be diversified away by investing in both GM and Customers Bancorp 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 Customers Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Customers Bancorp, you can compare the effects of market volatilities on GM and Customers Bancorp 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 Customers Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Customers Bancorp.
Diversification Opportunities for GM and Customers Bancorp
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between GM and Customers is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Customers Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Customers Bancorp 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 Customers Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Customers Bancorp has no effect on the direction of GM i.e., GM and Customers Bancorp go up and down completely randomly.
Pair Corralation between GM and Customers Bancorp
Allowing for the 90-day total investment horizon General Motors is expected to under-perform the Customers Bancorp. In addition to that, GM is 2.47 times more volatile than Customers Bancorp. It trades about -0.34 of its total potential returns per unit of risk. Customers Bancorp is currently generating about -0.03 per unit of volatility. If you would invest 2,014 in Customers Bancorp on November 27, 2024 and sell it today you would lose (13.00) from holding Customers Bancorp or give up 0.65% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Customers Bancorp
Performance |
| Timeline |
| General Motors |
| Customers Bancorp |
GM and Customers Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Customers Bancorp
The main advantage of trading using opposite GM and Customers Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Customers Bancorp 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 Customers Bancorp will offset losses from the drop in Customers Bancorp's long position.The idea behind General Motors and Customers Bancorp 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.| Customers Bancorp vs. CMS Energy Corp | Customers Bancorp vs. CMS Energy Corp | Customers Bancorp vs. American Financial Group | Customers Bancorp vs. Eagle Point Credit |
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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