Correlation Between GM and BLACK
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By analyzing existing cross correlation between General Motors and BLACK HILLS P, you can compare the effects of market volatilities on GM and BLACK 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 BLACK. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and BLACK.
Diversification Opportunities for GM and BLACK
Very good diversification
The 3 months correlation between GM and BLACK is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and BLACK HILLS P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BLACK HILLS P 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 BLACK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BLACK HILLS P has no effect on the direction of GM i.e., GM and BLACK go up and down completely randomly.
Pair Corralation between GM and BLACK
Allowing for the 90-day total investment horizon General Motors is expected to generate 3.12 times more return on investment than BLACK. However, GM is 3.12 times more volatile than BLACK HILLS P. It trades about 0.07 of its potential returns per unit of risk. BLACK HILLS P is currently generating about 0.01 per unit of risk. If you would invest 3,536 in General Motors on August 31, 2024 and sell it today you would earn a total of 2,023 from holding General Motors or generate 57.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 63.9% |
| Values | Daily Returns |
General Motors vs. BLACK HILLS P
Performance |
| Timeline |
| General Motors |
| BLACK HILLS P |
GM and BLACK Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and BLACK
The main advantage of trading using opposite GM and BLACK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, BLACK 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 BLACK will offset losses from the drop in BLACK's long position.The idea behind General Motors and BLACK HILLS P 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.| BLACK vs. The Coca Cola | BLACK vs. Coupang LLC | BLACK vs. SunLink Health Systems | BLACK vs. Upper Street Marketing |
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 CEOs Directory module to screen CEOs from public companies around the world.
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