Correlation Between GM and Placer Creek
Can any of the company-specific risk be diversified away by investing in both GM and Placer Creek 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 Placer Creek into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Placer Creek Mining, you can compare the effects of market volatilities on GM and Placer Creek 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 Placer Creek. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Placer Creek.
Diversification Opportunities for GM and Placer Creek
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GM and Placer is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Placer Creek Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Placer Creek Mining 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 Placer Creek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Placer Creek Mining has no effect on the direction of GM i.e., GM and Placer Creek go up and down completely randomly.
Pair Corralation between GM and Placer Creek
If you would invest 0.01 in Placer Creek Mining on December 11, 2024 and sell it today you would earn a total of 0.00 from holding Placer Creek Mining or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Placer Creek Mining
Performance |
| Timeline |
| General Motors |
| Placer Creek Mining |
GM and Placer Creek Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Placer Creek
The main advantage of trading using opposite GM and Placer Creek positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Placer Creek 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 Placer Creek will offset losses from the drop in Placer Creek's long position.The idea behind General Motors and Placer Creek Mining 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.| Placer Creek vs. Tritent International Agriculture | Placer Creek vs. RBC Bearings Incorporated | Placer Creek vs. ChampionX | Placer Creek vs. Tyson Foods |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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