Correlation Between GM and Allegiant Gold
Can any of the company-specific risk be diversified away by investing in both GM and Allegiant 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 Allegiant 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 Allegiant Gold, you can compare the effects of market volatilities on GM and Allegiant 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 Allegiant Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Allegiant Gold.
Diversification Opportunities for GM and Allegiant Gold
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GM and Allegiant is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Allegiant Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allegiant Gold 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 Allegiant Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allegiant Gold has no effect on the direction of GM i.e., GM and Allegiant Gold go up and down completely randomly.
Pair Corralation between GM and Allegiant Gold
Allowing for the 90-day total investment horizon GM is expected to generate 1.13 times less return on investment than Allegiant Gold. But when comparing it to its historical volatility, General Motors is 3.11 times less risky than Allegiant Gold. It trades about 0.09 of its potential returns per unit of risk. Allegiant Gold is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 9.50 in Allegiant Gold on August 29, 2024 and sell it today you would earn a total of 0.41 from holding Allegiant Gold or generate 4.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Allegiant Gold
Performance |
| Timeline |
| General Motors |
| Allegiant Gold |
GM and Allegiant Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Allegiant Gold
The main advantage of trading using opposite GM and Allegiant Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Allegiant 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 Allegiant Gold will offset losses from the drop in Allegiant Gold's long position.The idea behind General Motors and Allegiant Gold 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.| Allegiant Gold vs. Silver Hammer Mining | Allegiant Gold vs. Reyna Silver Corp | Allegiant Gold vs. Guanajuato Silver | Allegiant Gold vs. Silver One Resources |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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