Correlation Between GENERAL and Daily Journal

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Can any of the company-specific risk be diversified away by investing in both GENERAL and Daily Journal 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 GENERAL and Daily Journal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GENERAL ELEC CAP and Daily Journal Corp, you can compare the effects of market volatilities on GENERAL and Daily Journal 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 GENERAL with a short position of Daily Journal. Check out your portfolio center. Please also check ongoing floating volatility patterns of GENERAL and Daily Journal.

Diversification Opportunities for GENERAL and Daily Journal

-0.35
  Correlation Coefficient

Very good diversification

The 3 months correlation between GENERAL and Daily is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding GENERAL ELEC CAP and Daily Journal Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daily Journal Corp and GENERAL 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 ELEC CAP are associated (or correlated) with Daily Journal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daily Journal Corp has no effect on the direction of GENERAL i.e., GENERAL and Daily Journal go up and down completely randomly.

Pair Corralation between GENERAL and Daily Journal

Assuming the 90 days trading horizon GENERAL ELEC CAP is expected to under-perform the Daily Journal. But the bond apears to be less risky and, when comparing its historical volatility, GENERAL ELEC CAP is 1.32 times less risky than Daily Journal. The bond trades about -0.03 of its potential returns per unit of risk. The Daily Journal Corp is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  36,815  in Daily Journal Corp on September 2, 2024 and sell it today you would earn a total of  19,636  from holding Daily Journal Corp or generate 53.34% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy45.24%
ValuesDaily Returns

GENERAL ELEC CAP  vs.  Daily Journal Corp

 Performance 
       Timeline  
GENERAL ELEC CAP 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days GENERAL ELEC CAP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for GENERAL ELEC CAP investors.
Daily Journal Corp 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Daily Journal Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental indicators, Daily Journal displayed solid returns over the last few months and may actually be approaching a breakup point.

GENERAL and Daily Journal Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with GENERAL and Daily Journal

The main advantage of trading using opposite GENERAL and Daily Journal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GENERAL position performs unexpectedly, Daily Journal 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 Daily Journal will offset losses from the drop in Daily Journal's long position.
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The idea behind GENERAL ELEC CAP and Daily Journal Corp 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.
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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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