Correlation Between GM and Nova Minerals
Can any of the company-specific risk be diversified away by investing in both GM and Nova Minerals 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 Nova Minerals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Nova Minerals Limited, you can compare the effects of market volatilities on GM and Nova Minerals 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 Nova Minerals. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Nova Minerals.
Diversification Opportunities for GM and Nova Minerals
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between GM and Nova is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Nova Minerals Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nova Minerals Limited 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 Nova Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nova Minerals Limited has no effect on the direction of GM i.e., GM and Nova Minerals go up and down completely randomly.
Pair Corralation between GM and Nova Minerals
Allowing for the 90-day total investment horizon General Motors is expected to generate 0.47 times more return on investment than Nova Minerals. However, General Motors is 2.14 times less risky than Nova Minerals. It trades about -0.02 of its potential returns per unit of risk. Nova Minerals Limited is currently generating about -0.06 per unit of risk. If you would invest 4,972 in General Motors on December 11, 2024 and sell it today you would lose (164.00) from holding General Motors or give up 3.3% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Nova Minerals Limited
Performance |
| Timeline |
| General Motors |
| Nova Minerals Limited |
GM and Nova Minerals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Nova Minerals
The main advantage of trading using opposite GM and Nova Minerals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Nova Minerals 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 Nova Minerals will offset losses from the drop in Nova Minerals' long position.The idea behind General Motors and Nova Minerals Limited 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.| Nova Minerals vs. Titan Machinery | Nova Minerals vs. Enersys | Nova Minerals vs. Cedar Realty Trust | Nova Minerals vs. Cytek Biosciences |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
Other Complementary Tools
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio |