Correlation Between GM and MBGGR

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

By analyzing existing cross correlation between General Motors and MBGGR 345 06 JAN 27, you can compare the effects of market volatilities on GM and MBGGR 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 MBGGR. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and MBGGR.

Diversification Opportunities for GM and MBGGR

0.68

Correlation Coefficient

GM  MBGGR

Poor diversification

The 3 months correlation between GM and MBGGR is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and MBGGR 345 06 JAN 27 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MBGGR 345 06 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 MBGGR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MBGGR 345 06 has no effect on the direction of GM i.e., GM and MBGGR go up and down completely randomly.

Pair Corralation between GM and MBGGR

Allowing for the 90-day total investment horizon General Motors is expected to generate 7.97 times more return on investment than MBGGR. However, GM is 7.97 times more volatile than MBGGR 345 06 JAN 27. It trades about 0.06 of its potential returns per unit of risk. MBGGR 345 06 JAN 27 is currently generating about -0.34 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 Together
Strength	Significant
Accuracy	43.08%
Values	Daily Returns

General Motors  vs.  MBGGR 345 06 JAN 27

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 unfluctuating primary indicators, GM may actually be approaching a critical reversion point that can send shares even higher in January 2025.

MBGGR 345 06

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MBGGR 345 06 JAN 27 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for MBGGR 345 06 JAN 27 investors.

Pair Trading with GM and MBGGR

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

The idea behind General Motors and MBGGR 345 06 JAN 27 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.