Correlation Between GM and Glacier Bancorp
Can any of the company-specific risk be diversified away by investing in both GM and Glacier 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 Glacier 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 Glacier Bancorp, you can compare the effects of market volatilities on GM and Glacier 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 Glacier Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Glacier Bancorp.
Diversification Opportunities for GM and Glacier Bancorp
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GM and Glacier is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Glacier Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Glacier 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 Glacier Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Glacier Bancorp has no effect on the direction of GM i.e., GM and Glacier Bancorp go up and down completely randomly.
Pair Corralation between GM and Glacier Bancorp
Allowing for the 90-day total investment horizon General Motors is expected to generate 0.56 times more return on investment than Glacier Bancorp. However, General Motors is 1.78 times less risky than Glacier Bancorp. It trades about 0.12 of its potential returns per unit of risk. Glacier Bancorp is currently generating about 0.01 per unit of risk. If you would invest 4,355 in General Motors on January 25, 2024 and sell it today you would earn a total of 166.00 from holding General Motors or generate 3.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Glacier Bancorp
Performance |
| Timeline |
| General Motors |
| Glacier Bancorp |
GM and Glacier Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Glacier Bancorp
The main advantage of trading using opposite GM and Glacier Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Glacier 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 Glacier Bancorp will offset losses from the drop in Glacier Bancorp's long position.The idea behind General Motors and Glacier 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.| Glacier Bancorp vs. CVB Financial | Glacier Bancorp vs. Independent Bank Group | Glacier Bancorp vs. Columbia Banking System | Glacier Bancorp vs. First Financial Bankshares |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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