Correlation Between GM and Jacob Forward
Can any of the company-specific risk be diversified away by investing in both GM and Jacob Forward 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 Jacob Forward into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Jacob Forward ETF, you can compare the effects of market volatilities on GM and Jacob Forward 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 Jacob Forward. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Jacob Forward.
Diversification Opportunities for GM and Jacob Forward
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GM and Jacob is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Jacob Forward ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jacob Forward ETF 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 Jacob Forward. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jacob Forward ETF has no effect on the direction of GM i.e., GM and Jacob Forward go up and down completely randomly.
Pair Corralation between GM and Jacob Forward
Allowing for the 90-day total investment horizon GM is expected to generate 1.94 times less return on investment than Jacob Forward. In addition to that, GM is 1.27 times more volatile than Jacob Forward ETF. It trades about 0.13 of its total potential returns per unit of risk. Jacob Forward ETF is currently generating about 0.33 per unit of volatility. If you would invest 1,077 in Jacob Forward ETF on August 30, 2024 and sell it today you would earn a total of 180.00 from holding Jacob Forward ETF or generate 16.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Jacob Forward ETF
Performance |
| Timeline |
| General Motors |
| Jacob Forward ETF |
GM and Jacob Forward Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Jacob Forward
The main advantage of trading using opposite GM and Jacob Forward positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Jacob Forward 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 Jacob Forward will offset losses from the drop in Jacob Forward's long position.The idea behind General Motors and Jacob Forward ETF 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.| Jacob Forward vs. Amplify Thematic All Stars | Jacob Forward vs. Jacob Micro Cap | Jacob Forward vs. Main Thematic Innovation |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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