Correlation Between GM and BPCEGP

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Can any of the company-specific risk be diversified away by investing in both GM and BPCEGP 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 BPCEGP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and BPCEGP 1 20 JAN 26, you can compare the effects of market volatilities on GM and BPCEGP 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 BPCEGP. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and BPCEGP.

Diversification Opportunities for GM and BPCEGP

0.14
  Correlation Coefficient
 GM

Average diversification

The 3 months correlation between GM and BPCEGP is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and BPCEGP 1 20 JAN 26 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BPCEGP 1 20 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 BPCEGP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BPCEGP 1 20 has no effect on the direction of GM i.e., GM and BPCEGP go up and down completely randomly.

Pair Corralation between GM and BPCEGP

Allowing for the 90-day total investment horizon General Motors is expected to under-perform the BPCEGP. But the stock apears to be less risky and, when comparing its historical volatility, General Motors is 4.15 times less risky than BPCEGP. The stock trades about -0.09 of its potential returns per unit of risk. The BPCEGP 1 20 JAN 26 is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  9,668  in BPCEGP 1 20 JAN 26 on November 29, 2024 and sell it today you would lose (55.00) from holding BPCEGP 1 20 JAN 26 or give up 0.57% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy23.81%
ValuesDaily Returns

General Motors  vs.  BPCEGP 1 20 JAN 26

 Performance 
       Timeline  
General Motors 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days General Motors has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's primary indicators remain very healthy which may send shares a bit higher in March 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.
BPCEGP 1 20 

Risk-Adjusted Performance

Weak

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in BPCEGP 1 20 JAN 26 are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, BPCEGP is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

GM and BPCEGP Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with GM and BPCEGP

The main advantage of trading using opposite GM and BPCEGP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, BPCEGP 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 BPCEGP will offset losses from the drop in BPCEGP's long position.
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The idea behind General Motors and BPCEGP 1 20 JAN 26 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.
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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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.

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