Correlation Between GM and Sturgis Bancorp
Can any of the company-specific risk be diversified away by investing in both GM and Sturgis Bancorp 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 Sturgis Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Sturgis Bancorp, you can compare the effects of market volatilities on GM and Sturgis Bancorp 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 Sturgis Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Sturgis Bancorp.
Diversification Opportunities for GM and Sturgis Bancorp
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between GM and Sturgis is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Sturgis Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sturgis 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 Sturgis Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sturgis Bancorp has no effect on the direction of GM i.e., GM and Sturgis Bancorp go up and down completely randomly.
Pair Corralation between GM and Sturgis Bancorp
If you would invest 5,076 in General Motors on September 1, 2024 and sell it today you would earn a total of 483.00 from holding General Motors or generate 9.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 4.76% |
| Values | Daily Returns |
General Motors vs. Sturgis Bancorp
Performance |
| Timeline |
| General Motors |
| Sturgis Bancorp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
GM and Sturgis Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Sturgis Bancorp
The main advantage of trading using opposite GM and Sturgis Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Sturgis Bancorp 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 Sturgis Bancorp will offset losses from the drop in Sturgis Bancorp's long position.The idea behind General Motors and Sturgis 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.| Sturgis Bancorp vs. FS Bancorp | Sturgis Bancorp vs. Eastern Michigan Financial | Sturgis Bancorp vs. Grand River Commerce | Sturgis Bancorp vs. Bank of Botetourt |
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 Stocks Directory module to find actively traded stocks across global markets.
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