Correlation Between GM and Silver Spike
Can any of the company-specific risk be diversified away by investing in both GM and Silver Spike 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 Silver Spike into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Silver Spike Investment, you can compare the effects of market volatilities on GM and Silver Spike 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 Silver Spike. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Silver Spike.
Diversification Opportunities for GM and Silver Spike
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GM and Silver is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Silver Spike Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silver Spike Investment 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 Silver Spike. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silver Spike Investment has no effect on the direction of GM i.e., GM and Silver Spike go up and down completely randomly.
Pair Corralation between GM and Silver Spike
If you would invest 5,273 in General Motors on August 28, 2024 and sell it today you would earn a total of 747.00 from holding General Motors or generate 14.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 4.76% |
| Values | Daily Returns |
General Motors vs. Silver Spike Investment
Performance |
| Timeline |
| General Motors |
| Silver Spike Investment |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Solid
GM and Silver Spike Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Silver Spike
The main advantage of trading using opposite GM and Silver Spike positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Silver Spike 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 Silver Spike will offset losses from the drop in Silver Spike's long position.The idea behind General Motors and Silver Spike Investment 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.| Silver Spike vs. Entourage Health Corp | Silver Spike vs. Avicanna | Silver Spike vs. Benchmark Botanics | Silver Spike vs. Speakeasy Cannabis Club |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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