Correlation Between GM and Sibanye Stillwater
Can any of the company-specific risk be diversified away by investing in both GM and Sibanye Stillwater 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 Sibanye Stillwater into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Sibanye Stillwater Limited, you can compare the effects of market volatilities on GM and Sibanye Stillwater 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 Sibanye Stillwater. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Sibanye Stillwater.
Diversification Opportunities for GM and Sibanye Stillwater
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between GM and Sibanye is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Sibanye Stillwater Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sibanye Stillwater 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 Sibanye Stillwater. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sibanye Stillwater has no effect on the direction of GM i.e., GM and Sibanye Stillwater go up and down completely randomly.
Pair Corralation between GM and Sibanye Stillwater
Allowing for the 90-day total investment horizon General Motors is expected to under-perform the Sibanye Stillwater. But the stock apears to be less risky and, when comparing its historical volatility, General Motors is 1.12 times less risky than Sibanye Stillwater. The stock trades about -0.16 of its potential returns per unit of risk. The Sibanye Stillwater Limited is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 1,178 in Sibanye Stillwater Limited on September 13, 2024 and sell it today you would earn a total of 127.00 from holding Sibanye Stillwater Limited or generate 10.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
General Motors vs. Sibanye Stillwater Limited
Performance |
| Timeline |
| General Motors |
| Sibanye Stillwater |
GM and Sibanye Stillwater Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Sibanye Stillwater
The main advantage of trading using opposite GM and Sibanye Stillwater positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Sibanye Stillwater 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 Sibanye Stillwater will offset losses from the drop in Sibanye Stillwater's long position.The idea behind General Motors and Sibanye Stillwater 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.| Sibanye Stillwater vs. Extra Space Storage | Sibanye Stillwater vs. Paycom Software | Sibanye Stillwater vs. Tres Tentos Agroindustrial | Sibanye Stillwater vs. Take Two Interactive Software |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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