Correlation Between GM and MVB Financial
Can any of the company-specific risk be diversified away by investing in both GM and MVB Financial 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 MVB Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and MVB Financial Corp, you can compare the effects of market volatilities on GM and MVB Financial 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 MVB Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and MVB Financial.
Diversification Opportunities for GM and MVB Financial
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GM and MVB is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and MVB Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MVB Financial Corp 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 MVB Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MVB Financial Corp has no effect on the direction of GM i.e., GM and MVB Financial go up and down completely randomly.
Pair Corralation between GM and MVB Financial
Allowing for the 90-day total investment horizon GM is expected to generate 1.76 times less return on investment than MVB Financial. But when comparing it to its historical volatility, General Motors is 1.75 times less risky than MVB Financial. It trades about 0.07 of its potential returns per unit of risk. MVB Financial Corp is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 2,029 in MVB Financial Corp on August 29, 2024 and sell it today you would earn a total of 122.00 from holding MVB Financial Corp or generate 6.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. MVB Financial Corp
Performance |
| Timeline |
| General Motors |
| MVB Financial Corp |
GM and MVB Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and MVB Financial
The main advantage of trading using opposite GM and MVB Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, MVB Financial 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 MVB Financial will offset losses from the drop in MVB Financial's long position.The idea behind General Motors and MVB Financial Corp 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.| MVB Financial vs. Community West Bancshares | MVB Financial vs. First Financial Northwest | MVB Financial vs. CF Bankshares | MVB Financial vs. Home Federal Bancorp |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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