Correlation Between GM and Impala Platinum
Can any of the company-specific risk be diversified away by investing in both GM and Impala Platinum 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 Impala Platinum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Impala Platinum Holdings, you can compare the effects of market volatilities on GM and Impala Platinum 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 Impala Platinum. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Impala Platinum.
Diversification Opportunities for GM and Impala Platinum
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between GM and Impala is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Impala Platinum Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Impala Platinum Holdings 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 Impala Platinum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Impala Platinum Holdings has no effect on the direction of GM i.e., GM and Impala Platinum go up and down completely randomly.
Pair Corralation between GM and Impala Platinum
Allowing for the 90-day total investment horizon GM is expected to generate 2.27 times less return on investment than Impala Platinum. But when comparing it to its historical volatility, General Motors is 3.0 times less risky than Impala Platinum. It trades about 0.05 of its potential returns per unit of risk. Impala Platinum Holdings is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 395.00 in Impala Platinum Holdings on September 3, 2024 and sell it today you would earn a total of 155.00 from holding Impala Platinum Holdings or generate 39.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.02% |
| Values | Daily Returns |
General Motors vs. Impala Platinum Holdings
Performance |
| Timeline |
| General Motors |
| Impala Platinum Holdings |
GM and Impala Platinum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Impala Platinum
The main advantage of trading using opposite GM and Impala Platinum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Impala Platinum 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 Impala Platinum will offset losses from the drop in Impala Platinum's long position.The idea behind General Motors and Impala Platinum Holdings 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.| Impala Platinum vs. WESTLAKE CHEMICAL | Impala Platinum vs. Cal Maine Foods | Impala Platinum vs. CAL MAINE FOODS | Impala Platinum vs. Westlake Chemical |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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