Correlation Between GM and Vulcan Minerals
Can any of the company-specific risk be diversified away by investing in both GM and Vulcan Minerals 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 Vulcan Minerals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Vulcan Minerals, you can compare the effects of market volatilities on GM and Vulcan Minerals 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 Vulcan Minerals. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Vulcan Minerals.
Diversification Opportunities for GM and Vulcan Minerals
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between GM and Vulcan is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Vulcan Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vulcan Minerals 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 Vulcan Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vulcan Minerals has no effect on the direction of GM i.e., GM and Vulcan Minerals go up and down completely randomly.
Pair Corralation between GM and Vulcan Minerals
Allowing for the 90-day total investment horizon GM is expected to generate 17.38 times less return on investment than Vulcan Minerals. But when comparing it to its historical volatility, General Motors is 9.96 times less risky than Vulcan Minerals. It trades about 0.03 of its potential returns per unit of risk. Vulcan Minerals is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 21.00 in Vulcan Minerals on November 9, 2024 and sell it today you would lose (12.50) from holding Vulcan Minerals or give up 59.52% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.4% |
| Values | Daily Returns |
General Motors vs. Vulcan Minerals
Performance |
| Timeline |
| General Motors |
| Vulcan Minerals |
GM and Vulcan Minerals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Vulcan Minerals
The main advantage of trading using opposite GM and Vulcan Minerals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Vulcan Minerals 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 Vulcan Minerals will offset losses from the drop in Vulcan Minerals' long position.The idea behind General Motors and Vulcan Minerals 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.| Vulcan Minerals vs. Mason Graphite | Vulcan Minerals vs. Volt Lithium Corp | Vulcan Minerals vs. Northern Graphite | Vulcan Minerals vs. Syrah Resources Limited |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
Other Complementary Tools
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas |