Correlation Between GM and EURASIAN MINERALS
Can any of the company-specific risk be diversified away by investing in both GM and EURASIAN MINERALS 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 EURASIAN MINERALS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and EURASIAN MINERALS, you can compare the effects of market volatilities on GM and EURASIAN MINERALS 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 EURASIAN MINERALS. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and EURASIAN MINERALS.
Diversification Opportunities for GM and EURASIAN MINERALS
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between GM and EURASIAN is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and EURASIAN MINERALS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EURASIAN MINERALS 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 EURASIAN MINERALS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EURASIAN MINERALS has no effect on the direction of GM i.e., GM and EURASIAN MINERALS go up and down completely randomly.
Pair Corralation between GM and EURASIAN MINERALS
Allowing for the 90-day total investment horizon General Motors is expected to under-perform the EURASIAN MINERALS. In addition to that, GM is 2.19 times more volatile than EURASIAN MINERALS. It trades about -0.08 of its total potential returns per unit of risk. EURASIAN MINERALS is currently generating about -0.1 per unit of volatility. If you would invest 166.00 in EURASIAN MINERALS on September 21, 2024 and sell it today you would lose (5.00) from holding EURASIAN MINERALS or give up 3.01% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
General Motors vs. EURASIAN MINERALS
Performance |
| Timeline |
| General Motors |
| EURASIAN MINERALS |
GM and EURASIAN MINERALS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and EURASIAN MINERALS
The main advantage of trading using opposite GM and EURASIAN MINERALS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, EURASIAN MINERALS 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 EURASIAN MINERALS will offset losses from the drop in EURASIAN MINERALS's long position.The idea behind General Motors and EURASIAN MINERALS 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.| EURASIAN MINERALS vs. Dave Busters Entertainment | EURASIAN MINERALS vs. PARKEN Sport Entertainment | EURASIAN MINERALS vs. Jacquet Metal Service | EURASIAN MINERALS vs. CAREER EDUCATION |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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