Correlation Between GM and Slam Exploration
Can any of the company-specific risk be diversified away by investing in both GM and Slam Exploration 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 Slam Exploration into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Slam Exploration, you can compare the effects of market volatilities on GM and Slam Exploration 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 Slam Exploration. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Slam Exploration.
Diversification Opportunities for GM and Slam Exploration
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between GM and Slam is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Slam Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Slam Exploration 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 Slam Exploration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Slam Exploration has no effect on the direction of GM i.e., GM and Slam Exploration go up and down completely randomly.
Pair Corralation between GM and Slam Exploration
Allowing for the 90-day total investment horizon GM is expected to generate 9.93 times less return on investment than Slam Exploration. But when comparing it to its historical volatility, General Motors is 8.87 times less risky than Slam Exploration. It trades about 0.09 of its potential returns per unit of risk. Slam Exploration is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 2.00 in Slam Exploration on September 1, 2024 and sell it today you would earn a total of 2.00 from holding Slam Exploration or generate 100.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Slam Exploration
Performance |
| Timeline |
| General Motors |
| Slam Exploration |
GM and Slam Exploration Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Slam Exploration
The main advantage of trading using opposite GM and Slam Exploration positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Slam Exploration 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 Slam Exploration will offset losses from the drop in Slam Exploration's long position.The idea behind General Motors and Slam Exploration 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.| Slam Exploration vs. NextSource Materials | Slam Exploration vs. Dream Office Real | Slam Exploration vs. 2028 Investment Grade | Slam Exploration vs. Plaza Retail REIT |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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