Correlation Between GM and B GRIMM

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

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

Diversification Opportunities for GM and B GRIMM

-0.38

Correlation Coefficient

GM  B GRIMM

Very good diversification

The 3 months correlation between GM and BGRIM-R is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and B GRIMM POWER in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on B GRIMM POWER 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 B GRIMM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of B GRIMM POWER has no effect on the direction of GM i.e., GM and B GRIMM go up and down completely randomly.

Pair Corralation between GM and B GRIMM

Allowing for the 90-day total investment horizon General Motors is expected to under-perform the B GRIMM. In addition to that, GM is 1.11 times more volatile than B GRIMM POWER. It trades about -0.31 of its total potential returns per unit of risk. B GRIMM POWER is currently generating about -0.31 per unit of volatility. If you would invest  2,075  in B GRIMM POWER on September 24, 2024 and sell it today you would lose (245.00) from holding B GRIMM POWER or give up 11.81% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

General Motors  vs.  B GRIMM POWER

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.

B GRIMM POWER

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days B GRIMM POWER has generated negative risk-adjusted returns adding no value to investors with long positions. Even with conflicting performance in the last few months, the Stock's forward indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with GM and B GRIMM

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

The idea behind General Motors and B GRIMM POWER 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.