Correlation Between GM and Aris Gold
Can any of the company-specific risk be diversified away by investing in both GM and Aris Gold 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 Aris Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Aris Gold Corp, you can compare the effects of market volatilities on GM and Aris Gold 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 Aris Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Aris Gold.
Diversification Opportunities for GM and Aris Gold
Very good diversification
The 3 months correlation between GM and Aris is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Aris Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aris Gold 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 Aris Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aris Gold Corp has no effect on the direction of GM i.e., GM and Aris Gold go up and down completely randomly.
Pair Corralation between GM and Aris Gold
Allowing for the 90-day total investment horizon GM is expected to generate 1.18 times less return on investment than Aris Gold. But when comparing it to its historical volatility, General Motors is 1.43 times less risky than Aris Gold. It trades about 0.07 of its potential returns per unit of risk. Aris Gold Corp is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 338.00 in Aris Gold Corp on August 31, 2024 and sell it today you would earn a total of 201.00 from holding Aris Gold Corp or generate 59.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.73% |
| Values | Daily Returns |
General Motors vs. Aris Gold Corp
Performance |
| Timeline |
| General Motors |
| Aris Gold Corp |
GM and Aris Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Aris Gold
The main advantage of trading using opposite GM and Aris Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Aris Gold 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 Aris Gold will offset losses from the drop in Aris Gold's long position.The idea behind General Motors and Aris Gold 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.| Aris Gold vs. Calibre Mining Corp | Aris Gold vs. K92 Mining | Aris Gold vs. Equinox Gold Corp | Aris Gold vs. New Found Gold |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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