Correlation Between GM and Pensionbee Group

Can any of the company-specific risk be diversified away by investing in both GM and Pensionbee Group 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 Pensionbee Group into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between General Motors and Pensionbee Group PLC, you can compare the effects of market volatilities on GM and Pensionbee Group 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 Pensionbee Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Pensionbee Group.

Diversification Opportunities for GM and Pensionbee Group

-0.76

Correlation Coefficient

GM  Pensionbee Group

Pay attention - limited upside

The 3 months correlation between GM and Pensionbee is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Pensionbee Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pensionbee Group PLC 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 Pensionbee Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pensionbee Group PLC has no effect on the direction of GM i.e., GM and Pensionbee Group go up and down completely randomly.

Pair Corralation between GM and Pensionbee Group

Allowing for the 90-day total investment horizon General Motors is expected to generate 1.3 times more return on investment than Pensionbee Group. However, GM is 1.3 times more volatile than Pensionbee Group PLC. It trades about 0.06 of its potential returns per unit of risk. Pensionbee Group PLC is currently generating about -0.1 per unit of risk. If you would invest  4,793  in General Motors on September 23, 2024 and sell it today you would earn a total of  388.00  from holding General Motors or generate 8.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.48%
Values	Daily Returns

General Motors  vs.  Pensionbee Group PLC

General Motors

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in General Motors are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very weak primary indicators, GM may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pensionbee Group PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pensionbee Group PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with GM and Pensionbee Group

The main advantage of trading using opposite GM and Pensionbee Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Pensionbee Group 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 Pensionbee Group will offset losses from the drop in Pensionbee Group's long position.

The idea behind General Motors and Pensionbee Group PLC 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.

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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.