Correlation Between GM and Uranium Royalty
Can any of the company-specific risk be diversified away by investing in both GM and Uranium Royalty 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 Uranium Royalty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Uranium Royalty Corp, you can compare the effects of market volatilities on GM and Uranium Royalty 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 Uranium Royalty. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Uranium Royalty.
Diversification Opportunities for GM and Uranium Royalty
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between GM and Uranium is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Uranium Royalty Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Uranium Royalty 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 Uranium Royalty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Uranium Royalty Corp has no effect on the direction of GM i.e., GM and Uranium Royalty go up and down completely randomly.
Pair Corralation between GM and Uranium Royalty
Allowing for the 90-day total investment horizon General Motors is expected to under-perform the Uranium Royalty. But the stock apears to be less risky and, when comparing its historical volatility, General Motors is 1.42 times less risky than Uranium Royalty. The stock trades about -0.08 of its potential returns per unit of risk. The Uranium Royalty Corp is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 232.00 in Uranium Royalty Corp on November 18, 2024 and sell it today you would lose (10.00) from holding Uranium Royalty Corp or give up 4.31% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Uranium Royalty Corp
Performance |
| Timeline |
| General Motors |
| Uranium Royalty Corp |
GM and Uranium Royalty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Uranium Royalty
The main advantage of trading using opposite GM and Uranium Royalty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Uranium Royalty 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 Uranium Royalty will offset losses from the drop in Uranium Royalty's long position.The idea behind General Motors and Uranium Royalty 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.| Uranium Royalty vs. Energy Fuels | Uranium Royalty vs. NexGen Energy | Uranium Royalty vs. enCore Energy Corp | Uranium Royalty vs. Ur Energy |
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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