Correlation Between GM and West Vault

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

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

Diversification Opportunities for GM and West Vault

0.45

Correlation Coefficient

GM  West Vault

Very weak diversification

The 3 months correlation between GM and West is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and West Vault Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on West Vault 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 West Vault. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of West Vault Mining has no effect on the direction of GM i.e., GM and West Vault go up and down completely randomly.

Pair Corralation between GM and West Vault

Allowing for the 90-day total investment horizon General Motors is expected to generate 1.05 times more return on investment than West Vault. However, GM is 1.05 times more volatile than West Vault Mining. It trades about 0.12 of its potential returns per unit of risk. West Vault Mining is currently generating about 0.06 per unit of risk. If you would invest  4,533  in General Motors on May 7, 2025 and sell it today you would earn a total of  744.00  from holding General Motors or generate 16.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

General Motors  vs.  West Vault Mining

General Motors

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in General Motors are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile primary indicators, GM displayed solid returns over the last few months and may actually be approaching a breakup point.

West Vault Mining

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in West Vault Mining are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, West Vault may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with GM and West Vault

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

The idea behind General Motors and West Vault 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.

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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.