Correlation Between GM and Heritage NOLA
Can any of the company-specific risk be diversified away by investing in both GM and Heritage NOLA 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 Heritage NOLA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Heritage NOLA Bancorp, you can compare the effects of market volatilities on GM and Heritage NOLA 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 Heritage NOLA. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Heritage NOLA.
Diversification Opportunities for GM and Heritage NOLA
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GM and Heritage is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Heritage NOLA Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heritage NOLA 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 Heritage NOLA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heritage NOLA Bancorp has no effect on the direction of GM i.e., GM and Heritage NOLA go up and down completely randomly.
Pair Corralation between GM and Heritage NOLA
Allowing for the 90-day total investment horizon General Motors is expected to generate 1.03 times more return on investment than Heritage NOLA. However, GM is 1.03 times more volatile than Heritage NOLA Bancorp. It trades about -0.11 of its potential returns per unit of risk. Heritage NOLA Bancorp is currently generating about -0.17 per unit of risk. If you would invest 4,744 in General Motors on January 6, 2025 and sell it today you would lose (326.00) from holding General Motors or give up 6.87% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Heritage NOLA Bancorp
Performance |
| Timeline |
| General Motors |
| Heritage NOLA Bancorp |
GM and Heritage NOLA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Heritage NOLA
The main advantage of trading using opposite GM and Heritage NOLA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Heritage NOLA 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 Heritage NOLA will offset losses from the drop in Heritage NOLA's long position.The idea behind General Motors and Heritage NOLA 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.| Heritage NOLA vs. Banco Bradesco SA | Heritage NOLA vs. Itau Unibanco Banco | Heritage NOLA vs. Lloyds Banking Group | Heritage NOLA vs. Deutsche Bank AG |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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