Correlation Between Genuine Parts and Jumbo SA
Can any of the company-specific risk be diversified away by investing in both Genuine Parts and Jumbo SA 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 Genuine Parts and Jumbo SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Genuine Parts Co and Jumbo SA ADR, you can compare the effects of market volatilities on Genuine Parts and Jumbo SA 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 Genuine Parts with a short position of Jumbo SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Genuine Parts and Jumbo SA.
Diversification Opportunities for Genuine Parts and Jumbo SA
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Genuine and Jumbo is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Genuine Parts Co and Jumbo SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jumbo SA ADR and Genuine Parts 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 Genuine Parts Co are associated (or correlated) with Jumbo SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jumbo SA ADR has no effect on the direction of Genuine Parts i.e., Genuine Parts and Jumbo SA go up and down completely randomly.
Pair Corralation between Genuine Parts and Jumbo SA
Considering the 90-day investment horizon Genuine Parts Co is expected to under-perform the Jumbo SA. But the stock apears to be less risky and, when comparing its historical volatility, Genuine Parts Co is 2.54 times less risky than Jumbo SA. The stock trades about -0.01 of its potential returns per unit of risk. The Jumbo SA ADR is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 2,676 in Jumbo SA ADR on November 5, 2024 and sell it today you would earn a total of 464.00 from holding Jumbo SA ADR or generate 17.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 83.33% |
| Values | Daily Returns |
Genuine Parts Co vs. Jumbo SA ADR
Performance |
| Timeline |
| Genuine Parts |
| Jumbo SA ADR |
Genuine Parts and Jumbo SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Genuine Parts and Jumbo SA
The main advantage of trading using opposite Genuine Parts and Jumbo SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Genuine Parts position performs unexpectedly, Jumbo SA 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 Jumbo SA will offset losses from the drop in Jumbo SA's long position.| Genuine Parts vs. Dover | Genuine Parts vs. Cincinnati Financial | Genuine Parts vs. Leggett Platt Incorporated | Genuine Parts vs. WW Grainger |
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.
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