Correlation Between GM and Janus Balanced
Can any of the company-specific risk be diversified away by investing in both GM and Janus Balanced 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 Janus Balanced into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Janus Balanced Fund, you can compare the effects of market volatilities on GM and Janus Balanced 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 Janus Balanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Janus Balanced.
Diversification Opportunities for GM and Janus Balanced
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between GM and Janus is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Janus Balanced Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Janus Balanced 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 Janus Balanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Janus Balanced has no effect on the direction of GM i.e., GM and Janus Balanced go up and down completely randomly.
Pair Corralation between GM and Janus Balanced
Allowing for the 90-day total investment horizon General Motors is expected to generate 5.04 times more return on investment than Janus Balanced. However, GM is 5.04 times more volatile than Janus Balanced Fund. It trades about 0.2 of its potential returns per unit of risk. Janus Balanced Fund is currently generating about 0.05 per unit of risk. If you would invest 4,807 in General Motors on August 25, 2024 and sell it today you would earn a total of 1,046 from holding General Motors or generate 21.76% 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. Janus Balanced Fund
Performance |
| Timeline |
| General Motors |
| Janus Balanced |
GM and Janus Balanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Janus Balanced
The main advantage of trading using opposite GM and Janus Balanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Janus Balanced 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 Janus Balanced will offset losses from the drop in Janus Balanced's long position.The idea behind General Motors and Janus Balanced Fund 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.| Janus Balanced vs. Janus Growth And | Janus Balanced vs. Janus Global Research | Janus Balanced vs. Janus Enterprise Fund | Janus Balanced vs. Janus Research Fund |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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