Correlation Between GM and BankFirst Capital
Can any of the company-specific risk be diversified away by investing in both GM and BankFirst Capital 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 BankFirst Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and BankFirst Capital, you can compare the effects of market volatilities on GM and BankFirst Capital 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 BankFirst Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and BankFirst Capital.
Diversification Opportunities for GM and BankFirst Capital
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between GM and BankFirst is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and BankFirst Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BankFirst Capital 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 BankFirst Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BankFirst Capital has no effect on the direction of GM i.e., GM and BankFirst Capital go up and down completely randomly.
Pair Corralation between GM and BankFirst Capital
Allowing for the 90-day total investment horizon GM is expected to generate 4.6 times less return on investment than BankFirst Capital. In addition to that, GM is 2.05 times more volatile than BankFirst Capital. It trades about 0.01 of its total potential returns per unit of risk. BankFirst Capital is currently generating about 0.11 per unit of volatility. If you would invest 3,560 in BankFirst Capital on December 5, 2024 and sell it today you would earn a total of 580.00 from holding BankFirst Capital or generate 16.29% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 99.19% |
Values | Daily Returns |
General Motors vs. BankFirst Capital
Performance |
Timeline |
General Motors |
BankFirst Capital |
GM and BankFirst Capital Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with GM and BankFirst Capital
The main advantage of trading using opposite GM and BankFirst Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, BankFirst Capital 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 BankFirst Capital will offset losses from the drop in BankFirst Capital's long position.The idea behind General Motors and BankFirst Capital 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.BankFirst Capital vs. Harbor Bankshares | BankFirst Capital vs. Citizens Bancshares Corp | BankFirst Capital vs. Security Federal | BankFirst Capital vs. MF Bancorp |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
Other Complementary Tools
Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios |