Correlation Between GM and Sonoro Gold
Can any of the company-specific risk be diversified away by investing in both GM and Sonoro 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 Sonoro 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 Sonoro Gold Corp, you can compare the effects of market volatilities on GM and Sonoro 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 Sonoro Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Sonoro Gold.
Diversification Opportunities for GM and Sonoro Gold
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between GM and Sonoro is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Sonoro Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sonoro 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 Sonoro Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sonoro Gold Corp has no effect on the direction of GM i.e., GM and Sonoro Gold go up and down completely randomly.
Pair Corralation between GM and Sonoro Gold
Allowing for the 90-day total investment horizon General Motors is expected to generate 0.32 times more return on investment than Sonoro Gold. However, General Motors is 3.17 times less risky than Sonoro Gold. It trades about 0.17 of its potential returns per unit of risk. Sonoro Gold Corp is currently generating about 0.02 per unit of risk. If you would invest 5,076 in General Motors on September 1, 2024 and sell it today you would earn a total of 483.00 from holding General Motors or generate 9.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 91.3% |
| Values | Daily Returns |
General Motors vs. Sonoro Gold Corp
Performance |
| Timeline |
| General Motors |
| Sonoro Gold Corp |
GM and Sonoro Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Sonoro Gold
The main advantage of trading using opposite GM and Sonoro Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Sonoro 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 Sonoro Gold will offset losses from the drop in Sonoro Gold's long position.The idea behind General Motors and Sonoro 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.| Sonoro Gold vs. Endeavour Silver Corp | Sonoro Gold vs. Metalla Royalty Streaming | Sonoro Gold vs. New Pacific Metals | Sonoro Gold vs. Hecla Mining |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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