Correlation Between GM and Howard Bancorp

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both GM and Howard 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 Howard 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 Howard Bancorp, you can compare the effects of market volatilities on GM and Howard 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 Howard Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Howard Bancorp.

Diversification Opportunities for GM and Howard Bancorp

-0.3
  Correlation Coefficient

Very good diversification

The 24 months correlation between GM and Howard is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Howard Bancorp Inc in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on Howard 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 Howard Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Howard Bancorp has no effect on the direction of GM i.e., GM and Howard Bancorp go up and down completely randomly.

Pair Corralation between GM and Howard Bancorp

Allowing for the 90-day total investment horizon GM is expected to generate 2.34 times less return on investment than Howard Bancorp. But when comparing it to its historical volatility, General Motors is 1.13 times less risky than Howard Bancorp. It trades about 0.04 of its potential returns per unit of risk. Howard Bancorp is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  1,031  in Howard Bancorp on February 18, 2022 and sell it today you would earn a total of  1,299  from holding Howard Bancorp or generate 125.99% return on investment over 90 days.
Time Period24 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy83.97%
ValuesDaily Returns

General Motors  vs.  Howard Bancorp Inc

 Performance (%) 
      Timeline 
General Motors 
GM Performance
2 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in General Motors are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting primary indicators, GM may actually be approaching a critical reversion point that can send shares even higher in June 2022.

GM Price Channel

Howard Bancorp 
Howard Performance
0 of 100
Over the last 90 days Howard Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather weak primary indicators, Howard Bancorp exhibited solid returns over the last few months and may actually be approaching a breakup point.

GM and Howard Bancorp Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with GM and Howard Bancorp

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

General Motors

Pair trading matchups for GM

The idea behind General Motors and Howard 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.

Howard Bancorp

Pair trading matchups for Howard Bancorp

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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.

Other Complementary Tools

Fundamentals Comparison
Compare fundamentals across multiple equities to find investing opportunities
Go
My Watchlist Analysis
Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like
Go
Sync Your Broker
Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors.
Go
Equity Valuation
Check real value of public entities based on technical and fundamental data
Go
Price Ceiling Movement
Calculate and plot Price Ceiling Movement for different equity instruments
Go
Equity Analysis
Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities
Go
Price Exposure Probability
Analyze equity upside and downside potential for a given time horizon across multiple markets
Go
Pattern Recognition
Use different Pattern Recognition models to time the market across multiple global exchanges
Go
Money Flow Index
Determine momentum by analyzing Money Flow Index and other technical indicators
Go
Performance Analysis
Check effects of mean-variance optimization against your current asset allocation
Go
Portfolio Volatility
Check portfolio volatility and analyze historical return density to properly model market risk
Go