Correlation Between GM and Jackson Square
Can any of the company-specific risk be diversified away by investing in both GM and Jackson Square 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 Jackson Square into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Jackson Square Large Cap, you can compare the effects of market volatilities on GM and Jackson Square 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 Jackson Square. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Jackson Square.
Diversification Opportunities for GM and Jackson Square
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GM and Jackson is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Jackson Square Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jackson Square Large 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 Jackson Square. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jackson Square Large has no effect on the direction of GM i.e., GM and Jackson Square go up and down completely randomly.
Pair Corralation between GM and Jackson Square
Allowing for the 90-day total investment horizon GM is expected to generate 1.34 times less return on investment than Jackson Square. In addition to that, GM is 3.57 times more volatile than Jackson Square Large Cap. It trades about 0.06 of its total potential returns per unit of risk. Jackson Square Large Cap is currently generating about 0.29 per unit of volatility. If you would invest 2,474 in Jackson Square Large Cap on September 5, 2024 and sell it today you would earn a total of 122.00 from holding Jackson Square Large Cap or generate 4.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
General Motors vs. Jackson Square Large Cap
Performance |
| Timeline |
| General Motors |
| Jackson Square Large |
GM and Jackson Square Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Jackson Square
The main advantage of trading using opposite GM and Jackson Square positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Jackson Square 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 Jackson Square will offset losses from the drop in Jackson Square's long position.The idea behind General Motors and Jackson Square Large Cap 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.| Jackson Square vs. Jackson Square Smid Cap | Jackson Square vs. Jackson Square Smid Cap | Jackson Square vs. Jackson Square Smid Cap |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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