Correlation Between GM and Prosper Gold
Can any of the company-specific risk be diversified away by investing in both GM and Prosper 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 Prosper 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 Prosper Gold Corp, you can compare the effects of market volatilities on GM and Prosper 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 Prosper Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Prosper Gold.
Diversification Opportunities for GM and Prosper Gold
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GM and Prosper is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Prosper Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prosper Gold Corp 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 Prosper Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prosper Gold Corp has no effect on the direction of GM i.e., GM and Prosper Gold go up and down completely randomly.
Pair Corralation between GM and Prosper Gold
Allowing for the 90-day total investment horizon General Motors is expected to generate 0.37 times more return on investment than Prosper Gold. However, General Motors is 2.73 times less risky than Prosper Gold. It trades about 0.11 of its potential returns per unit of risk. Prosper Gold Corp is currently generating about 0.01 per unit of risk. If you would invest 3,070 in General Motors on August 29, 2024 and sell it today you would earn a total of 2,480 from holding General Motors or generate 80.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.66% |
| Values | Daily Returns |
General Motors vs. Prosper Gold Corp
Performance |
| Timeline |
| General Motors |
| Prosper Gold Corp |
GM and Prosper Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Prosper Gold
The main advantage of trading using opposite GM and Prosper Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Prosper 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 Prosper Gold will offset losses from the drop in Prosper Gold's long position.The idea behind General Motors and Prosper Gold Corp 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.| Prosper Gold vs. First Majestic Silver | Prosper Gold vs. Ivanhoe Energy | Prosper Gold vs. Orezone Gold Corp | Prosper Gold vs. Faraday Copper 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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