Correlation Between GM and Greatland Gold
Can any of the company-specific risk be diversified away by investing in both GM and Greatland 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 Greatland 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 Greatland Gold plc, you can compare the effects of market volatilities on GM and Greatland 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 Greatland Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Greatland Gold.
Diversification Opportunities for GM and Greatland Gold
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between GM and Greatland is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Greatland Gold plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Greatland Gold plc 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 Greatland Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Greatland Gold plc has no effect on the direction of GM i.e., GM and Greatland Gold go up and down completely randomly.
Pair Corralation between GM and Greatland Gold
Allowing for the 90-day total investment horizon General Motors is expected to generate 0.48 times more return on investment than Greatland Gold. However, General Motors is 2.06 times less risky than Greatland Gold. It trades about 0.11 of its potential returns per unit of risk. Greatland Gold plc is currently generating about -0.01 per unit of risk. If you would invest 3,348 in General Motors on September 3, 2024 and sell it today you would earn a total of 2,156 from holding General Motors or generate 64.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
General Motors vs. Greatland Gold plc
Performance |
| Timeline |
| General Motors |
| Greatland Gold plc |
GM and Greatland Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Greatland Gold
The main advantage of trading using opposite GM and Greatland Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Greatland 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 Greatland Gold will offset losses from the drop in Greatland Gold's long position.The idea behind General Motors and Greatland Gold plc 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.| Greatland Gold vs. Fonix Mobile plc | Greatland Gold vs. Charter Communications Cl | Greatland Gold vs. Infrastrutture Wireless Italiane | Greatland Gold vs. Cairo Communication SpA |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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