Correlation Between GM and Cabral Gold
Can any of the company-specific risk be diversified away by investing in both GM and Cabral 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 Cabral 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 Cabral Gold, you can compare the effects of market volatilities on GM and Cabral 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 Cabral Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Cabral Gold.
Diversification Opportunities for GM and Cabral Gold
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between GM and Cabral is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Cabral Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cabral 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 Cabral Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cabral Gold has no effect on the direction of GM i.e., GM and Cabral Gold go up and down completely randomly.
Pair Corralation between GM and Cabral Gold
Allowing for the 90-day total investment horizon General Motors is expected to generate 0.26 times more return on investment than Cabral Gold. However, General Motors is 3.88 times less risky than Cabral Gold. It trades about 0.26 of its potential returns per unit of risk. Cabral Gold is currently generating about 0.0 per unit of risk. If you would invest 4,573 in General Motors on August 26, 2024 and sell it today you would earn a total of 1,280 from holding General Motors or generate 27.99% 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. Cabral Gold
Performance |
| Timeline |
| General Motors |
| Cabral Gold |
GM and Cabral Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Cabral Gold
The main advantage of trading using opposite GM and Cabral Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Cabral 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 Cabral Gold will offset losses from the drop in Cabral Gold's long position.The idea behind General Motors and Cabral 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.| Cabral Gold vs. Aurion Resources | Cabral Gold vs. Liberty Gold Corp | Cabral Gold vs. Orezone Gold Corp | Cabral Gold vs. Radisson Mining 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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