Correlation Between GM and Banque Cantonale
Can any of the company-specific risk be diversified away by investing in both GM and Banque Cantonale 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 Banque Cantonale into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Banque Cantonale du, you can compare the effects of market volatilities on GM and Banque Cantonale 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 Banque Cantonale. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Banque Cantonale.
Diversification Opportunities for GM and Banque Cantonale
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between GM and Banque is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Banque Cantonale du in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banque Cantonale 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 Banque Cantonale. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banque Cantonale has no effect on the direction of GM i.e., GM and Banque Cantonale go up and down completely randomly.
Pair Corralation between GM and Banque Cantonale
Allowing for the 90-day total investment horizon General Motors is expected to generate 3.08 times more return on investment than Banque Cantonale. However, GM is 3.08 times more volatile than Banque Cantonale du. It trades about 0.15 of its potential returns per unit of risk. Banque Cantonale du is currently generating about 0.05 per unit of risk. If you would invest 2,858 in General Motors on August 24, 2024 and sell it today you would earn a total of 2,990 from holding General Motors or generate 104.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.2% |
| Values | Daily Returns |
General Motors vs. Banque Cantonale du
Performance |
| Timeline |
| General Motors |
| Banque Cantonale |
GM and Banque Cantonale Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Banque Cantonale
The main advantage of trading using opposite GM and Banque Cantonale positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Banque Cantonale 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 Banque Cantonale will offset losses from the drop in Banque Cantonale's long position.The idea behind General Motors and Banque Cantonale du 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.| Banque Cantonale vs. BB Biotech AG | Banque Cantonale vs. Adval Tech Holding | Banque Cantonale vs. Basler Kantonalbank | Banque Cantonale vs. Zurich Insurance Group |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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