Correlation Between GM and SpringBig Holdings
Can any of the company-specific risk be diversified away by investing in both GM and SpringBig Holdings 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 SpringBig Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and SpringBig Holdings, you can compare the effects of market volatilities on GM and SpringBig Holdings 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 SpringBig Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and SpringBig Holdings.
Diversification Opportunities for GM and SpringBig Holdings
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between GM and SpringBig is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and SpringBig Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SpringBig Holdings 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 SpringBig Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SpringBig Holdings has no effect on the direction of GM i.e., GM and SpringBig Holdings go up and down completely randomly.
Pair Corralation between GM and SpringBig Holdings
Allowing for the 90-day total investment horizon GM is expected to generate 11.71 times less return on investment than SpringBig Holdings. But when comparing it to its historical volatility, General Motors is 10.31 times less risky than SpringBig Holdings. It trades about 0.05 of its potential returns per unit of risk. SpringBig Holdings is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 5.00 in SpringBig Holdings on August 29, 2024 and sell it today you would lose (3.80) from holding SpringBig Holdings or give up 76.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 25.05% |
| Values | Daily Returns |
General Motors vs. SpringBig Holdings
Performance |
| Timeline |
| General Motors |
| SpringBig Holdings |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
GM and SpringBig Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and SpringBig Holdings
The main advantage of trading using opposite GM and SpringBig Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, SpringBig Holdings 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 SpringBig Holdings will offset losses from the drop in SpringBig Holdings' long position.The idea behind General Motors and SpringBig Holdings 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.| SpringBig Holdings vs. Dave Warrants | SpringBig Holdings vs. SoundHound AI | SpringBig Holdings vs. Swvl Holdings Corp | SpringBig Holdings vs. WM Technology |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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