Correlation Between GM and Alexandria Mineral

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Can any of the company-specific risk be diversified away by investing in both GM and Alexandria Mineral 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 Alexandria Mineral into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Alexandria Mineral Oils, you can compare the effects of market volatilities on GM and Alexandria Mineral 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 Alexandria Mineral. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Alexandria Mineral.

Diversification Opportunities for GM and Alexandria Mineral

GMAlexandriaDiversified AwayGMAlexandriaDiversified Away100%
-0.72
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between GM and Alexandria is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Alexandria Mineral Oils in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alexandria Mineral Oils 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 Alexandria Mineral. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alexandria Mineral Oils has no effect on the direction of GM i.e., GM and Alexandria Mineral go up and down completely randomly.

Pair Corralation between GM and Alexandria Mineral

Allowing for the 90-day total investment horizon General Motors is expected to generate 0.65 times more return on investment than Alexandria Mineral. However, General Motors is 1.54 times less risky than Alexandria Mineral. It trades about 0.12 of its potential returns per unit of risk. Alexandria Mineral Oils is currently generating about -0.02 per unit of risk. If you would invest  2,851  in General Motors on September 23, 2024 and sell it today you would earn a total of  2,330  from holding General Motors or generate 81.73% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy78.15%
ValuesDaily Returns

General Motors  vs.  Alexandria Mineral Oils

 Performance 
JavaScript chart by amCharts 3.21.15OctNovDec -20-1001020
JavaScript chart by amCharts 3.21.15GM AMOC
       Timeline  
General Motors 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in General Motors are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating primary indicators, GM may actually be approaching a critical reversion point that can send shares even higher in January 2025.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec45505560
Alexandria Mineral Oils 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Alexandria Mineral Oils 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 technical and fundamental indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec7.588.599.5

GM and Alexandria Mineral Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-7.6-5.69-3.79-1.880.03181.963.925.887.84 0.020.040.060.080.100.12
JavaScript chart by amCharts 3.21.15GM AMOC
       Returns  

Pair Trading with GM and Alexandria Mineral

The main advantage of trading using opposite GM and Alexandria Mineral positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Alexandria Mineral 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 Alexandria Mineral will offset losses from the drop in Alexandria Mineral's long position.
The idea behind General Motors and Alexandria Mineral Oils 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.
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 Transaction History module to view history of all your transactions and understand their impact on performance.

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