Correlation Between GM and Jackson Square
Can any of the company-specific risk be diversified away by investing in both GM and Jackson Square 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 Jackson Square into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Jackson Square Smid Cap, you can compare the effects of market volatilities on GM and Jackson Square 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 Jackson Square. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Jackson Square.
Diversification Opportunities for GM and Jackson Square
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GM and JACKSON is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Jackson Square Smid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jackson Square Smid 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 Jackson Square. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jackson Square Smid has no effect on the direction of GM i.e., GM and Jackson Square go up and down completely randomly.
Pair Corralation between GM and Jackson Square
Allowing for the 90-day total investment horizon General Motors is expected to generate 1.82 times more return on investment than Jackson Square. However, GM is 1.82 times more volatile than Jackson Square Smid Cap. It trades about 0.07 of its potential returns per unit of risk. Jackson Square Smid Cap is currently generating about 0.04 per unit of risk. If you would invest 3,617 in General Motors on September 4, 2024 and sell it today you would earn a total of 1,887 from holding General Motors or generate 52.17% 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. Jackson Square Smid Cap
Performance |
| Timeline |
| General Motors |
| Jackson Square Smid |
GM and Jackson Square Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Jackson Square
The main advantage of trading using opposite GM and Jackson Square positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Jackson Square 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 Jackson Square will offset losses from the drop in Jackson Square's long position.The idea behind General Motors and Jackson Square Smid Cap 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.| Jackson Square vs. Franklin Growth Fund | Jackson Square vs. Janus Venture Fund | Jackson Square vs. Jackson Square Smid Cap | Jackson Square vs. Pimco Small Cap |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
Other Complementary Tools
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Money Managers Screen money managers from public funds and ETFs managed around the world |