Correlation Between Bankers Investment and General Motors

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

By analyzing existing cross correlation between Bankers Investment Trust and General Motors Co, you can compare the effects of market volatilities on Bankers Investment and General Motors 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 Bankers Investment with a short position of General Motors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bankers Investment and General Motors.

Diversification Opportunities for Bankers Investment and General Motors

-0.07

Correlation Coefficient

Bankers Investment  General Motors

Good diversification

The 3 months correlation between Bankers and General is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Bankers Investment Trust and General Motors Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General Motors and Bankers Investment 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 Bankers Investment Trust are associated (or correlated) with General Motors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of General Motors has no effect on the direction of Bankers Investment i.e., Bankers Investment and General Motors go up and down completely randomly.

Pair Corralation between Bankers Investment and General Motors

Assuming the 90 days trading horizon Bankers Investment Trust is expected to generate 0.34 times more return on investment than General Motors. However, Bankers Investment Trust is 2.98 times less risky than General Motors. It trades about 0.19 of its potential returns per unit of risk. General Motors Co is currently generating about -0.12 per unit of risk. If you would invest  11,480  in Bankers Investment Trust on October 23, 2024 and sell it today you would earn a total of  700.00  from holding Bankers Investment Trust or generate 6.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	97.5%
Values	Daily Returns

Bankers Investment Trust  vs.  General Motors Co

Bankers Investment Trust

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bankers Investment Trust are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Bankers Investment may actually be approaching a critical reversion point that can send shares even higher in February 2025.

General Motors

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days General Motors Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, General Motors is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Bankers Investment and General Motors

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

The idea behind Bankers Investment Trust and General Motors Co 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.