Correlation Between GM and AbraSilver Resource
Can any of the company-specific risk be diversified away by investing in both GM and AbraSilver Resource 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 AbraSilver Resource into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and AbraSilver Resource Corp, you can compare the effects of market volatilities on GM and AbraSilver Resource 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 AbraSilver Resource. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and AbraSilver Resource.
Diversification Opportunities for GM and AbraSilver Resource
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between GM and AbraSilver is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and AbraSilver Resource Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AbraSilver Resource Corp 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 AbraSilver Resource. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AbraSilver Resource Corp has no effect on the direction of GM i.e., GM and AbraSilver Resource go up and down completely randomly.
Pair Corralation between GM and AbraSilver Resource
Allowing for the 90-day total investment horizon General Motors is expected to generate 0.61 times more return on investment than AbraSilver Resource. However, General Motors is 1.65 times less risky than AbraSilver Resource. It trades about 0.08 of its potential returns per unit of risk. AbraSilver Resource Corp is currently generating about 0.05 per unit of risk. If you would invest 4,551 in General Motors on September 1, 2024 and sell it today you would earn a total of 1,008 from holding General Motors or generate 22.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. AbraSilver Resource Corp
Performance |
| Timeline |
| General Motors |
| AbraSilver Resource Corp |
GM and AbraSilver Resource Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and AbraSilver Resource
The main advantage of trading using opposite GM and AbraSilver Resource positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, AbraSilver Resource 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 AbraSilver Resource will offset losses from the drop in AbraSilver Resource's long position.The idea behind General Motors and AbraSilver Resource Corp 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.| AbraSilver Resource vs. Defiance Silver Corp | AbraSilver Resource vs. HUMANA INC | AbraSilver Resource vs. SCOR PK | AbraSilver Resource vs. Aquagold International |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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