Correlation Between GM and Hummingbird Resources
Can any of the company-specific risk be diversified away by investing in both GM and Hummingbird 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 Hummingbird 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 Hummingbird Resources PLC, you can compare the effects of market volatilities on GM and Hummingbird 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 Hummingbird Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Hummingbird Resources.
Diversification Opportunities for GM and Hummingbird Resources
-0.79 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GM and Hummingbird is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Hummingbird Resources PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hummingbird Resources 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 Hummingbird Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hummingbird Resources PLC has no effect on the direction of GM i.e., GM and Hummingbird Resources go up and down completely randomly.
Pair Corralation between GM and Hummingbird Resources
Allowing for the 90-day total investment horizon General Motors is expected to generate 0.11 times more return on investment than Hummingbird Resources. However, General Motors is 9.1 times less risky than Hummingbird Resources. It trades about 0.28 of its potential returns per unit of risk. Hummingbird Resources PLC is currently generating about -0.17 per unit of risk. If you would invest 5,207 in General Motors on August 26, 2024 and sell it today you would earn a total of 646.00 from holding General Motors or generate 12.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Hummingbird Resources PLC
Performance |
| Timeline |
| General Motors |
| Hummingbird Resources PLC |
GM and Hummingbird Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Hummingbird Resources
The main advantage of trading using opposite GM and Hummingbird Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Hummingbird 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 Hummingbird Resources will offset losses from the drop in Hummingbird Resources' long position.The idea behind General Motors and Hummingbird Resources 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.| Hummingbird Resources vs. Aurion Resources | Hummingbird Resources vs. Liberty Gold Corp | Hummingbird Resources vs. Orezone Gold Corp | Hummingbird Resources 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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