Correlation Between GM and UBM Development
Can any of the company-specific risk be diversified away by investing in both GM and UBM Development 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 UBM Development into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and UBM Development AG, you can compare the effects of market volatilities on GM and UBM Development 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 UBM Development. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and UBM Development.
Diversification Opportunities for GM and UBM Development
-0.9 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GM and UBM is -0.9. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and UBM Development AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UBM Development AG 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 UBM Development. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UBM Development AG has no effect on the direction of GM i.e., GM and UBM Development go up and down completely randomly.
Pair Corralation between GM and UBM Development
Allowing for the 90-day total investment horizon General Motors is expected to generate 1.55 times more return on investment than UBM Development. However, GM is 1.55 times more volatile than UBM Development AG. It trades about 0.13 of its potential returns per unit of risk. UBM Development AG is currently generating about -0.16 per unit of risk. If you would invest 4,913 in General Motors on August 27, 2024 and sell it today you would earn a total of 940.00 from holding General Motors or generate 19.13% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Significant |
Accuracy | 98.46% |
Values | Daily Returns |
General Motors vs. UBM Development AG
Performance |
Timeline |
General Motors |
UBM Development AG |
GM and UBM Development Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with GM and UBM Development
The main advantage of trading using opposite GM and UBM Development positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, UBM Development 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 UBM Development will offset losses from the drop in UBM Development's long position.The idea behind General Motors and UBM Development AG 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.UBM Development vs. CA Immobilien Anlagen | UBM Development vs. S IMMO AG | UBM Development vs. IMMOFINANZ AG | UBM Development vs. Wienerberger AG |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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