Correlation Between GM and Jaguar Mining
Can any of the company-specific risk be diversified away by investing in both GM and Jaguar Mining 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 Jaguar Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Jaguar Mining, you can compare the effects of market volatilities on GM and Jaguar Mining 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 Jaguar Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Jaguar Mining.
Diversification Opportunities for GM and Jaguar Mining
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between GM and Jaguar is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Jaguar Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jaguar 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 Jaguar Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jaguar Mining has no effect on the direction of GM i.e., GM and Jaguar Mining go up and down completely randomly.
Pair Corralation between GM and Jaguar Mining
Allowing for the 90-day total investment horizon General Motors is expected to under-perform the Jaguar Mining. But the stock apears to be less risky and, when comparing its historical volatility, General Motors is 1.4 times less risky than Jaguar Mining. The stock trades about -0.06 of its potential returns per unit of risk. The Jaguar Mining is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 235.00 in Jaguar Mining on November 4, 2024 and sell it today you would earn a total of 22.00 from holding Jaguar Mining or generate 9.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 90.91% |
| Values | Daily Returns |
General Motors vs. Jaguar Mining
Performance |
| Timeline |
| General Motors |
| Jaguar Mining |
GM and Jaguar Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Jaguar Mining
The main advantage of trading using opposite GM and Jaguar Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Jaguar Mining 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 Jaguar Mining will offset losses from the drop in Jaguar Mining's long position.The idea behind General Motors and Jaguar 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.| Jaguar Mining vs. Wallbridge Mining | Jaguar Mining vs. Dundee Precious Metals | Jaguar Mining vs. International Tower Hill | Jaguar Mining vs. Centerra Gold |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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