Correlation Between GM and Metalla Royalty
Can any of the company-specific risk be diversified away by investing in both GM and Metalla 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 Metalla 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 Metalla Royalty Streaming, you can compare the effects of market volatilities on GM and Metalla 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 Metalla Royalty. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Metalla Royalty.
Diversification Opportunities for GM and Metalla Royalty
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between GM and Metalla is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Metalla Royalty Streaming in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metalla Royalty Streaming 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 Metalla Royalty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metalla Royalty Streaming has no effect on the direction of GM i.e., GM and Metalla Royalty go up and down completely randomly.
Pair Corralation between GM and Metalla Royalty
Allowing for the 90-day total investment horizon General Motors is expected to under-perform the Metalla Royalty. In addition to that, GM is 1.02 times more volatile than Metalla Royalty Streaming. It trades about -0.15 of its total potential returns per unit of risk. Metalla Royalty Streaming is currently generating about -0.1 per unit of volatility. If you would invest 275.00 in Metalla Royalty Streaming on September 15, 2024 and sell it today you would lose (17.00) from holding Metalla Royalty Streaming or give up 6.18% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 91.3% |
| Values | Daily Returns |
General Motors vs. Metalla Royalty Streaming
Performance |
| Timeline |
| General Motors |
| Metalla Royalty Streaming |
GM and Metalla Royalty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Metalla Royalty
The main advantage of trading using opposite GM and Metalla Royalty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Metalla 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 Metalla Royalty will offset losses from the drop in Metalla Royalty's long position.The idea behind General Motors and Metalla Royalty Streaming 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.| Metalla Royalty vs. MGIC INVESTMENT | Metalla Royalty vs. United Insurance Holdings | Metalla Royalty vs. AGNC INVESTMENT | Metalla Royalty vs. REGAL ASIAN INVESTMENTS |
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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