Correlation Between GM and URU Metals
Can any of the company-specific risk be diversified away by investing in both GM and URU Metals 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 URU Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and URU Metals, you can compare the effects of market volatilities on GM and URU Metals 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 URU Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and URU Metals.
Diversification Opportunities for GM and URU Metals
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GM and URU is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and URU Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on URU Metals 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 URU Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of URU Metals has no effect on the direction of GM i.e., GM and URU Metals go up and down completely randomly.
Pair Corralation between GM and URU Metals
Allowing for the 90-day total investment horizon General Motors is expected to generate 0.87 times more return on investment than URU Metals. However, General Motors is 1.15 times less risky than URU Metals. It trades about -0.01 of its potential returns per unit of risk. URU Metals is currently generating about -0.22 per unit of risk. If you would invest 4,781 in General Motors on December 7, 2024 and sell it today you would lose (70.00) from holding General Motors or give up 1.46% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
General Motors vs. URU Metals
Performance |
| Timeline |
| General Motors |
| URU Metals |
GM and URU Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and URU Metals
The main advantage of trading using opposite GM and URU Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, URU Metals 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 URU Metals will offset losses from the drop in URU Metals' long position.The idea behind General Motors and URU Metals 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.| URU Metals vs. Nordea Bank Abp | URU Metals vs. Cembra Money Bank | URU Metals vs. Sydbank | URU Metals vs. LPKF Laser Electronics |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
Other Complementary Tools
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets |