Correlation Between GM and Peoples Bancorp

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

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

Diversification Opportunities for GM and Peoples Bancorp

0.64

Correlation Coefficient

GM  Peoples Bancorp

Poor diversification

The 3 months correlation between GM and Peoples is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Peoples Bancorp of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Peoples Bancorp 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 Peoples Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Peoples Bancorp has no effect on the direction of GM i.e., GM and Peoples Bancorp go up and down completely randomly.

Pair Corralation between GM and Peoples Bancorp

Allowing for the 90-day total investment horizon General Motors is expected to under-perform the Peoples Bancorp. In addition to that, GM is 2.2 times more volatile than Peoples Bancorp of. It trades about -0.31 of its total potential returns per unit of risk. Peoples Bancorp of is currently generating about 0.07 per unit of volatility. If you would invest  3,124  in Peoples Bancorp of on September 24, 2024 and sell it today you would earn a total of  45.00  from holding Peoples Bancorp of or generate 1.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

General Motors  vs.  Peoples Bancorp of

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.

Peoples Bancorp

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Peoples Bancorp of are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting fundamental drivers, Peoples Bancorp disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GM and Peoples Bancorp

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

The idea behind General Motors and Peoples Bancorp of 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.