Correlation Between GM and Vontobel Holding

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

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

Diversification Opportunities for GM and Vontobel Holding

0.0

Correlation Coefficient

GM  Vontobel Holding

Pay attention - limited upside

The 3 months correlation between GM and Vontobel is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Vontobel Holding AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vontobel Holding 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 Vontobel Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vontobel Holding has no effect on the direction of GM i.e., GM and Vontobel Holding go up and down completely randomly.

Pair Corralation between GM and Vontobel Holding

Allowing for the 90-day total investment horizon General Motors is expected to generate 2.03 times more return on investment than Vontobel Holding. However, GM is 2.03 times more volatile than Vontobel Holding AG. It trades about 0.05 of its potential returns per unit of risk. Vontobel Holding AG is currently generating about 0.03 per unit of risk. If you would invest  3,864  in General Motors on September 12, 2024 and sell it today you would earn a total of  1,410  from holding General Motors or generate 36.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	71.59%
Values	Daily Returns

General Motors  vs.  Vontobel Holding AG

General Motors

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in General Motors are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating primary indicators, GM displayed solid returns over the last few months and may actually be approaching a breakup point.

Vontobel Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vontobel Holding AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical indicators, Vontobel Holding is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with GM and Vontobel Holding

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

The idea behind General Motors and Vontobel Holding AG 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.

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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 Commodity Directory module to find actively traded commodities issued by global exchanges.