Correlation Between GM and Stock Yards
Can any of the company-specific risk be diversified away by investing in both GM and Stock Yards 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 Stock Yards into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Stock Yards Bancorp, you can compare the effects of market volatilities on GM and Stock Yards 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 Stock Yards. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Stock Yards.
Diversification Opportunities for GM and Stock Yards
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between GM and Stock is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Stock Yards Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stock Yards 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 Stock Yards. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stock Yards Bancorp has no effect on the direction of GM i.e., GM and Stock Yards go up and down completely randomly.
Pair Corralation between GM and Stock Yards
Allowing for the 90-day total investment horizon General Motors is expected to under-perform the Stock Yards. In addition to that, GM is 1.46 times more volatile than Stock Yards Bancorp. It trades about -0.02 of its total potential returns per unit of risk. Stock Yards Bancorp is currently generating about -0.02 per unit of volatility. If you would invest 7,280 in Stock Yards Bancorp on December 25, 2024 and sell it today you would lose (214.00) from holding Stock Yards Bancorp or give up 2.94% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
General Motors vs. Stock Yards Bancorp
Performance |
Timeline |
General Motors |
Stock Yards Bancorp |
GM and Stock Yards Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with GM and Stock Yards
The main advantage of trading using opposite GM and Stock Yards positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Stock Yards 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 Stock Yards will offset losses from the drop in Stock Yards' long position.The idea behind General Motors and Stock Yards Bancorp 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.Stock Yards vs. First National Corp | Stock Yards vs. Southern Missouri Bancorp | Stock Yards vs. Shore Bancshares | Stock Yards vs. First Capital |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
Other Complementary Tools
Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
Equity Valuation Check real value of public entities based on technical and fundamental data | |
Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities |