Correlation Between GM and Silver X

Can any of the company-specific risk be diversified away by investing in both GM and Silver X 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 Silver X into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between General Motors and Silver X Mining, you can compare the effects of market volatilities on GM and Silver X 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 Silver X. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Silver X.

Diversification Opportunities for GM and Silver X

-0.11

Correlation Coefficient

GM  Silver X

Good diversification

The 3 months correlation between GM and Silver is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Silver X Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silver X Mining 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 Silver X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silver X Mining has no effect on the direction of GM i.e., GM and Silver X go up and down completely randomly.

Pair Corralation between GM and Silver X

Allowing for the 90-day total investment horizon General Motors is expected to generate 0.36 times more return on investment than Silver X. However, General Motors is 2.76 times less risky than Silver X. It trades about 0.04 of its potential returns per unit of risk. Silver X Mining is currently generating about 0.0 per unit of risk. If you would invest  3,510  in General Motors on December 2, 2024 and sell it today you would earn a total of  1,403  from holding General Motors or generate 39.97% 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.  Silver X Mining

General Motors

Risk-Adjusted Performance

Very Weak

Over the last 90 days General Motors has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's primary indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Silver X Mining

Risk-Adjusted Performance

Very Weak

Over the last 90 days Silver X Mining has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with GM and Silver X

The main advantage of trading using opposite GM and Silver X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Silver X 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 Silver X will offset losses from the drop in Silver X's long position.

The idea behind General Motors and Silver X Mining 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.

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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.