Correlation Between GM and Fbc Hldg
Can any of the company-specific risk be diversified away by investing in both GM and Fbc Hldg 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 Fbc Hldg into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Fbc Hldg, you can compare the effects of market volatilities on GM and Fbc Hldg 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 Fbc Hldg. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Fbc Hldg.
Diversification Opportunities for GM and Fbc Hldg
Weak diversification
The 3 months correlation between GM and Fbc is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Fbc Hldg in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fbc Hldg 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 Fbc Hldg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fbc Hldg has no effect on the direction of GM i.e., GM and Fbc Hldg go up and down completely randomly.
Pair Corralation between GM and Fbc Hldg
Allowing for the 90-day total investment horizon GM is expected to generate 576.19 times less return on investment than Fbc Hldg. But when comparing it to its historical volatility, General Motors is 159.35 times less risky than Fbc Hldg. It trades about 0.09 of its potential returns per unit of risk. Fbc Hldg is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 0.01 in Fbc Hldg on September 1, 2024 and sell it today you would earn a total of 0.00 from holding Fbc Hldg or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 97.34% |
| Values | Daily Returns |
General Motors vs. Fbc Hldg
Performance |
| Timeline |
| General Motors |
| Fbc Hldg |
GM and Fbc Hldg Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Fbc Hldg
The main advantage of trading using opposite GM and Fbc Hldg positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Fbc Hldg 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 Fbc Hldg will offset losses from the drop in Fbc Hldg's long position.The idea behind General Motors and Fbc Hldg 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.| Fbc Hldg vs. Cato Corporation | Fbc Hldg vs. Zumiez Inc | Fbc Hldg vs. Digital Brands Group | Fbc Hldg vs. Buckle Inc |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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