Correlation Between GM and Raiffeisen Bank
Can any of the company-specific risk be diversified away by investing in both GM and Raiffeisen Bank 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 Raiffeisen Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Raiffeisen Bank International, you can compare the effects of market volatilities on GM and Raiffeisen Bank 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 Raiffeisen Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Raiffeisen Bank.
Diversification Opportunities for GM and Raiffeisen Bank
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between GM and Raiffeisen is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Raiffeisen Bank International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Raiffeisen Bank Inte 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 Raiffeisen Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Raiffeisen Bank Inte has no effect on the direction of GM i.e., GM and Raiffeisen Bank go up and down completely randomly.
Pair Corralation between GM and Raiffeisen Bank
Allowing for the 90-day total investment horizon General Motors is expected to generate 0.63 times more return on investment than Raiffeisen Bank. However, General Motors is 1.59 times less risky than Raiffeisen Bank. It trades about 0.14 of its potential returns per unit of risk. Raiffeisen Bank International is currently generating about 0.02 per unit of risk. If you would invest 5,292 in General Motors on August 24, 2024 and sell it today you would earn a total of 276.00 from holding General Motors or generate 5.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Raiffeisen Bank International
Performance |
| Timeline |
| General Motors |
| Raiffeisen Bank Inte |
GM and Raiffeisen Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Raiffeisen Bank
The main advantage of trading using opposite GM and Raiffeisen Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Raiffeisen Bank 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 Raiffeisen Bank will offset losses from the drop in Raiffeisen Bank's long position.The idea behind General Motors and Raiffeisen Bank International 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.| Raiffeisen Bank vs. Vienna Insurance Group | Raiffeisen Bank vs. AGRANA Beteiligungs Aktiengesellschaft | Raiffeisen Bank vs. Voestalpine AG | Raiffeisen Bank vs. BKS 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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