Correlation Between GM and Brf Clf
Can any of the company-specific risk be diversified away by investing in both GM and Brf Clf 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 Brf Clf into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Brf Clf Mplop, you can compare the effects of market volatilities on GM and Brf Clf 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 Brf Clf. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Brf Clf.
Diversification Opportunities for GM and Brf Clf
Very good diversification
The 3 months correlation between GM and Brf is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Brf Clf Mplop in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brf Clf Mplop 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 Brf Clf. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brf Clf Mplop has no effect on the direction of GM i.e., GM and Brf Clf go up and down completely randomly.
Pair Corralation between GM and Brf Clf
Allowing for the 90-day total investment horizon General Motors is expected to generate 9.6 times more return on investment than Brf Clf. However, GM is 9.6 times more volatile than Brf Clf Mplop. It trades about 0.08 of its potential returns per unit of risk. Brf Clf Mplop is currently generating about 0.12 per unit of risk. If you would invest 3,275 in General Motors on September 12, 2024 and sell it today you would earn a total of 1,999 from holding General Motors or generate 61.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.7% |
| Values | Daily Returns |
General Motors vs. Brf Clf Mplop
Performance |
| Timeline |
| General Motors |
| Brf Clf Mplop |
GM and Brf Clf Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Brf Clf
The main advantage of trading using opposite GM and Brf Clf positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Brf Clf 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 Brf Clf will offset losses from the drop in Brf Clf's long position.The idea behind General Motors and Brf Clf Mplop 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.| Brf Clf vs. Acm Dynamic Opportunity | Brf Clf vs. Scharf Global Opportunity | Brf Clf vs. Leggmason Partners Institutional | Brf Clf vs. Qs Large Cap |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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