Correlation Between GM and Pgim Jennison
Can any of the company-specific risk be diversified away by investing in both GM and Pgim Jennison 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 Pgim Jennison into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Pgim Jennison Diversified, you can compare the effects of market volatilities on GM and Pgim Jennison 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 Pgim Jennison. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Pgim Jennison.
Diversification Opportunities for GM and Pgim Jennison
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GM and Pgim is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Pgim Jennison Diversified in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pgim Jennison Diversified 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 Pgim Jennison. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pgim Jennison Diversified has no effect on the direction of GM i.e., GM and Pgim Jennison go up and down completely randomly.
Pair Corralation between GM and Pgim Jennison
Allowing for the 90-day total investment horizon General Motors is expected to generate 1.76 times more return on investment than Pgim Jennison. However, GM is 1.76 times more volatile than Pgim Jennison Diversified. It trades about 0.13 of its potential returns per unit of risk. Pgim Jennison Diversified is currently generating about 0.08 per unit of risk. If you would invest 4,319 in General Motors on August 28, 2024 and sell it today you would earn a total of 1,701 from holding General Motors or generate 39.38% 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. Pgim Jennison Diversified
Performance |
| Timeline |
| General Motors |
| Pgim Jennison Diversified |
GM and Pgim Jennison Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Pgim Jennison
The main advantage of trading using opposite GM and Pgim Jennison positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Pgim Jennison 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 Pgim Jennison will offset losses from the drop in Pgim Jennison's long position.The idea behind General Motors and Pgim Jennison Diversified 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.| Pgim Jennison vs. Franklin Natural Resources | Pgim Jennison vs. Goehring Rozencwajg Resources | Pgim Jennison vs. Calvert Global Energy | Pgim Jennison vs. Short Oil Gas |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
Other Complementary Tools
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas |