Correlation Between GM and CANEX Metals
Can any of the company-specific risk be diversified away by investing in both GM and CANEX Metals 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 CANEX Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and CANEX Metals, you can compare the effects of market volatilities on GM and CANEX Metals 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 CANEX Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and CANEX Metals.
Diversification Opportunities for GM and CANEX Metals
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between GM and CANEX is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and CANEX Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CANEX Metals 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 CANEX Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CANEX Metals has no effect on the direction of GM i.e., GM and CANEX Metals go up and down completely randomly.
Pair Corralation between GM and CANEX Metals
Allowing for the 90-day total investment horizon General Motors is expected to under-perform the CANEX Metals. In addition to that, GM is 9.17 times more volatile than CANEX Metals. It trades about -0.05 of its total potential returns per unit of risk. CANEX Metals is currently generating about -0.22 per unit of volatility. If you would invest 2.03 in CANEX Metals on November 3, 2024 and sell it today you would lose (0.03) from holding CANEX Metals or give up 1.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
General Motors vs. CANEX Metals
Performance |
| Timeline |
| General Motors |
| CANEX Metals |
GM and CANEX Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and CANEX Metals
The main advantage of trading using opposite GM and CANEX Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, CANEX Metals 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 CANEX Metals will offset losses from the drop in CANEX Metals' long position.The idea behind General Motors and CANEX Metals 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.| CANEX Metals vs. Antioquia Gold | CANEX Metals vs. Radisson Mining Resources | CANEX Metals vs. Asante Gold | CANEX Metals vs. Baru 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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