Correlation Between GM and J Hancock
Can any of the company-specific risk be diversified away by investing in both GM and J Hancock 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 J Hancock into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and J Hancock Ii, you can compare the effects of market volatilities on GM and J Hancock 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 J Hancock. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and J Hancock.
Diversification Opportunities for GM and J Hancock
Poor diversification
The 3 months correlation between GM and JROUX is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and J Hancock Ii in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on J Hancock Ii 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 J Hancock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of J Hancock Ii has no effect on the direction of GM i.e., GM and J Hancock go up and down completely randomly.
Pair Corralation between GM and J Hancock
Allowing for the 90-day total investment horizon General Motors is expected to generate 4.17 times more return on investment than J Hancock. However, GM is 4.17 times more volatile than J Hancock Ii. It trades about 0.07 of its potential returns per unit of risk. J Hancock Ii is currently generating about 0.15 per unit of risk. If you would invest 5,273 in General Motors on August 29, 2024 and sell it today you would earn a total of 206.00 from holding General Motors or generate 3.91% 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. J Hancock Ii
Performance |
| Timeline |
| General Motors |
| J Hancock Ii |
GM and J Hancock Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and J Hancock
The main advantage of trading using opposite GM and J Hancock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, J Hancock 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 J Hancock will offset losses from the drop in J Hancock's long position.The idea behind General Motors and J Hancock Ii 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.| J Hancock vs. Victory High Yield | J Hancock vs. Maryland Tax Free Bond | J Hancock vs. Bbh Intermediate Municipal | J Hancock vs. Ultra Short Fixed Income |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
Other Complementary Tools
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Bonds Directory Find actively traded corporate debentures issued by US companies |