Correlation Between GM and Vista Gold
Can any of the company-specific risk be diversified away by investing in both GM and Vista 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 Vista 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 Vista Gold, you can compare the effects of market volatilities on GM and Vista 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 Vista Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Vista Gold.
Diversification Opportunities for GM and Vista Gold
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between GM and Vista is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Vista Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vista Gold 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 Vista Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vista Gold has no effect on the direction of GM i.e., GM and Vista Gold go up and down completely randomly.
Pair Corralation between GM and Vista Gold
Allowing for the 90-day total investment horizon General Motors is expected to under-perform the Vista Gold. In addition to that, GM is 1.02 times more volatile than Vista Gold. It trades about -0.05 of its total potential returns per unit of risk. Vista Gold is currently generating about 0.18 per unit of volatility. If you would invest 58.00 in Vista Gold on November 3, 2024 and sell it today you would earn a total of 6.00 from holding Vista Gold or generate 10.34% 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. Vista Gold
Performance |
| Timeline |
| General Motors |
| Vista Gold |
GM and Vista Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Vista Gold
The main advantage of trading using opposite GM and Vista Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Vista 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 Vista Gold will offset losses from the drop in Vista Gold's long position.The idea behind General Motors and Vista Gold 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.| Vista Gold vs. International Tower Hill | Vista Gold vs. Harmony Gold Mining | Vista Gold vs. Seabridge Gold | Vista Gold vs. IAMGold |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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