Correlation Between GM and Excellon Resources
Can any of the company-specific risk be diversified away by investing in both GM and Excellon Resources 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 Excellon Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Excellon Resources, you can compare the effects of market volatilities on GM and Excellon Resources 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 Excellon Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Excellon Resources.
Diversification Opportunities for GM and Excellon Resources
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between GM and Excellon is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Excellon Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Excellon Resources 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 Excellon Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Excellon Resources has no effect on the direction of GM i.e., GM and Excellon Resources go up and down completely randomly.
Pair Corralation between GM and Excellon Resources
Allowing for the 90-day total investment horizon GM is expected to generate 4.62 times less return on investment than Excellon Resources. But when comparing it to its historical volatility, General Motors is 1.51 times less risky than Excellon Resources. It trades about 0.05 of its potential returns per unit of risk. Excellon Resources is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 30.00 in Excellon Resources on September 3, 2024 and sell it today you would earn a total of 1.00 from holding Excellon Resources or generate 3.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 1.62% |
| Values | Daily Returns |
General Motors vs. Excellon Resources
Performance |
| Timeline |
| General Motors |
| Excellon Resources |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
GM and Excellon Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Excellon Resources
The main advantage of trading using opposite GM and Excellon Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Excellon Resources 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 Excellon Resources will offset losses from the drop in Excellon Resources' long position.The idea behind General Motors and Excellon Resources 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.| Excellon Resources vs. Arrow Electronics | Excellon Resources vs. Diageo PLC ADR | Excellon Resources vs. Uber Technologies | Excellon Resources vs. Western Acquisition Ventures |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
Other Complementary Tools
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities |