Correlation Between GM and Brookmount Explorations
Can any of the company-specific risk be diversified away by investing in both GM and Brookmount Explorations 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 Brookmount Explorations into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Brookmount Explorations, you can compare the effects of market volatilities on GM and Brookmount Explorations 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 Brookmount Explorations. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Brookmount Explorations.
Diversification Opportunities for GM and Brookmount Explorations
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between GM and Brookmount is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Brookmount Explorations in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookmount Explorations 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 Brookmount Explorations. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brookmount Explorations has no effect on the direction of GM i.e., GM and Brookmount Explorations go up and down completely randomly.
Pair Corralation between GM and Brookmount Explorations
Allowing for the 90-day total investment horizon General Motors is expected to generate 0.29 times more return on investment than Brookmount Explorations. However, General Motors is 3.49 times less risky than Brookmount Explorations. It trades about 0.17 of its potential returns per unit of risk. Brookmount Explorations is currently generating about 0.04 per unit of risk. If you would invest 5,076 in General Motors on September 1, 2024 and sell it today you would earn a total of 483.00 from holding General Motors or generate 9.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
General Motors vs. Brookmount Explorations
Performance |
| Timeline |
| General Motors |
| Brookmount Explorations |
GM and Brookmount Explorations Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Brookmount Explorations
The main advantage of trading using opposite GM and Brookmount Explorations positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Brookmount Explorations 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 Brookmount Explorations will offset losses from the drop in Brookmount Explorations' long position.The idea behind General Motors and Brookmount Explorations 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.| Brookmount Explorations vs. Aurion Resources | Brookmount Explorations vs. Rio2 Limited | Brookmount Explorations vs. Palamina Corp | Brookmount Explorations vs. BTU Metals Corp |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
Other Complementary Tools
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio |