Correlation Between GM and Dynasty Gold
Can any of the company-specific risk be diversified away by investing in both GM and Dynasty 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 Dynasty 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 Dynasty Gold Corp, you can compare the effects of market volatilities on GM and Dynasty 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 Dynasty Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Dynasty Gold.
Diversification Opportunities for GM and Dynasty Gold
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GM and Dynasty is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Dynasty Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dynasty 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 Dynasty Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dynasty Gold Corp has no effect on the direction of GM i.e., GM and Dynasty Gold go up and down completely randomly.
Pair Corralation between GM and Dynasty Gold
Allowing for the 90-day total investment horizon General Motors is expected to under-perform the Dynasty Gold. But the stock apears to be less risky and, when comparing its historical volatility, General Motors is 1.94 times less risky than Dynasty Gold. The stock trades about -0.13 of its potential returns per unit of risk. The Dynasty Gold Corp is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 10.00 in Dynasty Gold Corp on November 5, 2024 and sell it today you would lose (0.68) from holding Dynasty Gold Corp or give up 6.8% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Dynasty Gold Corp
Performance |
| Timeline |
| General Motors |
| Dynasty Gold Corp |
GM and Dynasty Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Dynasty Gold
The main advantage of trading using opposite GM and Dynasty Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Dynasty 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 Dynasty Gold will offset losses from the drop in Dynasty Gold's long position.The idea behind General Motors and Dynasty 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.| Dynasty Gold vs. Rackla Metals | Dynasty Gold vs. Lavras Gold Corp | Dynasty Gold vs. TRU Precious Metals | Dynasty Gold vs. Getchell Gold 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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