Correlation Between GM and Barings Global

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

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

Diversification Opportunities for GM and Barings Global

-0.84

Correlation Coefficient

GM  Barings Global

Pay attention - limited upside

The 3 months correlation between GM and Barings is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Barings Global Floating in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barings Global Floating 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 Barings Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barings Global Floating has no effect on the direction of GM i.e., GM and Barings Global go up and down completely randomly.

Pair Corralation between GM and Barings Global

Allowing for the 90-day total investment horizon General Motors is expected to generate 30.0 times more return on investment than Barings Global. However, GM is 30.0 times more volatile than Barings Global Floating. It trades about 0.04 of its potential returns per unit of risk. Barings Global Floating is currently generating about -0.18 per unit of risk. If you would invest  4,790  in General Motors on December 5, 2024 and sell it today you would earn a total of  58.00  from holding General Motors or generate 1.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

General Motors  vs.  Barings Global Floating

General Motors

Risk-Adjusted Performance

Very Weak

Over the last 90 days General Motors has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's primary indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Barings Global Floating

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Barings Global Floating are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Barings Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with GM and Barings Global

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

The idea behind General Motors and Barings Global Floating 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.