Correlation Between GM and JPM AC
Can any of the company-specific risk be diversified away by investing in both GM and JPM AC 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 JPM AC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and JPM AC Asia, you can compare the effects of market volatilities on GM and JPM AC 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 JPM AC. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and JPM AC.
Diversification Opportunities for GM and JPM AC
Excellent diversification
The 3 months correlation between GM and JPM is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and JPM AC Asia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPM AC Asia 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 JPM AC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPM AC Asia has no effect on the direction of GM i.e., GM and JPM AC go up and down completely randomly.
Pair Corralation between GM and JPM AC
Allowing for the 90-day total investment horizon General Motors is expected to generate 2.37 times more return on investment than JPM AC. However, GM is 2.37 times more volatile than JPM AC Asia. It trades about 0.05 of its potential returns per unit of risk. JPM AC Asia is currently generating about 0.03 per unit of risk. If you would invest 3,507 in General Motors on November 28, 2024 and sell it today you would earn a total of 1,418 from holding General Motors or generate 40.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.37% |
| Values | Daily Returns |
General Motors vs. JPM AC Asia
Performance |
| Timeline |
| General Motors |
| JPM AC Asia |
GM and JPM AC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and JPM AC
The main advantage of trading using opposite GM and JPM AC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, JPM AC 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 JPM AC will offset losses from the drop in JPM AC's long position.The idea behind General Motors and JPM AC Asia 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.| JPM AC vs. SP 500 VIX | JPM AC vs. WisdomTree Natural Gas | JPM AC vs. Leverage Shares 2x | JPM AC vs. WisdomTree Silver 3x |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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