Correlation Between GM and Janus Venture
Can any of the company-specific risk be diversified away by investing in both GM and Janus Venture 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 Venture 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 Venture Fund, you can compare the effects of market volatilities on GM and Janus Venture 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 Venture. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Janus Venture.
Diversification Opportunities for GM and Janus Venture
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between GM and Janus is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Janus Venture Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Janus Venture 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 Venture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Janus Venture has no effect on the direction of GM i.e., GM and Janus Venture go up and down completely randomly.
Pair Corralation between GM and Janus Venture
Allowing for the 90-day total investment horizon General Motors is expected to generate 1.28 times more return on investment than Janus Venture. However, GM is 1.28 times more volatile than Janus Venture Fund. It trades about -0.14 of its potential returns per unit of risk. Janus Venture Fund is currently generating about -0.31 per unit of risk. If you would invest 4,836 in General Motors on January 4, 2025 and sell it today you would lose (418.00) from holding General Motors or give up 8.64% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Janus Venture Fund
Performance |
| Timeline |
| General Motors |
| Janus Venture |
GM and Janus Venture Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Janus Venture
The main advantage of trading using opposite GM and Janus Venture positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Janus Venture 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 Venture will offset losses from the drop in Janus Venture's long position.The idea behind General Motors and Janus Venture 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 Venture vs. Nuveen Dividend Value | Janus Venture vs. Mfs Servative Allocation | Janus Venture vs. Nuveen Mid Cap | Janus Venture vs. New Economy 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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