Correlation Between GM and Scorpio Gold
Can any of the company-specific risk be diversified away by investing in both GM and Scorpio 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 Scorpio 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 Scorpio Gold Corp, you can compare the effects of market volatilities on GM and Scorpio 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 Scorpio Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Scorpio Gold.
Diversification Opportunities for GM and Scorpio Gold
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GM and Scorpio is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Scorpio Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scorpio 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 Scorpio Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scorpio Gold Corp has no effect on the direction of GM i.e., GM and Scorpio Gold go up and down completely randomly.
Pair Corralation between GM and Scorpio Gold
Allowing for the 90-day total investment horizon General Motors is expected to generate 0.53 times more return on investment than Scorpio Gold. However, General Motors is 1.9 times less risky than Scorpio Gold. It trades about 0.12 of its potential returns per unit of risk. Scorpio Gold Corp is currently generating about -0.24 per unit of risk. If you would invest 5,197 in General Motors on August 31, 2024 and sell it today you would earn a total of 353.00 from holding General Motors or generate 6.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
General Motors vs. Scorpio Gold Corp
Performance |
| Timeline |
| General Motors |
| Scorpio Gold Corp |
GM and Scorpio Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Scorpio Gold
The main advantage of trading using opposite GM and Scorpio Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Scorpio 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 Scorpio Gold will offset losses from the drop in Scorpio Gold's long position.The idea behind General Motors and Scorpio 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.| Scorpio Gold vs. RT Minerals Corp | Scorpio Gold vs. Rathdowney Resources | Scorpio Gold vs. Rackla Metals | Scorpio Gold vs. Precipitate 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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