Correlation Between GM and Jpmorgan Smartretirement
Can any of the company-specific risk be diversified away by investing in both GM and Jpmorgan Smartretirement 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 Jpmorgan Smartretirement into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Jpmorgan Smartretirement 2035, you can compare the effects of market volatilities on GM and Jpmorgan Smartretirement 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 Jpmorgan Smartretirement. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Jpmorgan Smartretirement.
Diversification Opportunities for GM and Jpmorgan Smartretirement
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between GM and Jpmorgan is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Jpmorgan Smartretirement 2035 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jpmorgan Smartretirement 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 Jpmorgan Smartretirement. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jpmorgan Smartretirement has no effect on the direction of GM i.e., GM and Jpmorgan Smartretirement go up and down completely randomly.
Pair Corralation between GM and Jpmorgan Smartretirement
Allowing for the 90-day total investment horizon General Motors is expected to generate 3.35 times more return on investment than Jpmorgan Smartretirement. However, GM is 3.35 times more volatile than Jpmorgan Smartretirement 2035. It trades about 0.07 of its potential returns per unit of risk. Jpmorgan Smartretirement 2035 is currently generating about 0.1 per unit of risk. If you would invest 3,574 in General Motors on September 1, 2024 and sell it today you would earn a total of 1,985 from holding General Motors or generate 55.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Jpmorgan Smartretirement 2035
Performance |
| Timeline |
| General Motors |
| Jpmorgan Smartretirement |
GM and Jpmorgan Smartretirement Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Jpmorgan Smartretirement
The main advantage of trading using opposite GM and Jpmorgan Smartretirement positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Jpmorgan Smartretirement 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 Jpmorgan Smartretirement will offset losses from the drop in Jpmorgan Smartretirement's long position.The idea behind General Motors and Jpmorgan Smartretirement 2035 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.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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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