Correlation Between GM and 06406RBP1
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By analyzing existing cross correlation between General Motors and BK 4706 01 FEB 34, you can compare the effects of market volatilities on GM and 06406RBP1 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 06406RBP1. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and 06406RBP1.
Diversification Opportunities for GM and 06406RBP1
Pay attention - limited upside
The 3 months correlation between GM and 06406RBP1 is -0.91. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and BK 4706 01 FEB 34 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BK 4706 01 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 06406RBP1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BK 4706 01 has no effect on the direction of GM i.e., GM and 06406RBP1 go up and down completely randomly.
Pair Corralation between GM and 06406RBP1
Allowing for the 90-day total investment horizon General Motors is expected to generate 3.1 times more return on investment than 06406RBP1. However, GM is 3.1 times more volatile than BK 4706 01 FEB 34. It trades about 0.07 of its potential returns per unit of risk. BK 4706 01 FEB 34 is currently generating about -0.09 per unit of risk. If you would invest 5,273 in General Motors on August 29, 2024 and sell it today you would earn a total of 206.00 from holding General Motors or generate 3.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
General Motors vs. BK 4706 01 FEB 34
Performance |
| Timeline |
| General Motors |
| BK 4706 01 |
GM and 06406RBP1 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and 06406RBP1
The main advantage of trading using opposite GM and 06406RBP1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, 06406RBP1 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 06406RBP1 will offset losses from the drop in 06406RBP1's long position.The idea behind General Motors and BK 4706 01 FEB 34 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.| 06406RBP1 vs. AEP TEX INC | 06406RBP1 vs. US BANK NATIONAL | 06406RBP1 vs. 3M Company | 06406RBP1 vs. Alcoa Corp |
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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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