Correlation Between GM and Janus Balanced
Can any of the company-specific risk be diversified away by investing in both GM and Janus Balanced 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 Janus Balanced into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Janus Balanced Fund, you can compare the effects of market volatilities on GM and Janus Balanced 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 Janus Balanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Janus Balanced.
Diversification Opportunities for GM and Janus Balanced
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between GM and Janus is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Janus Balanced Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Janus Balanced 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 Janus Balanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Janus Balanced has no effect on the direction of GM i.e., GM and Janus Balanced go up and down completely randomly.
Pair Corralation between GM and Janus Balanced
Allowing for the 90-day total investment horizon General Motors is expected to under-perform the Janus Balanced. In addition to that, GM is 1.97 times more volatile than Janus Balanced Fund. It trades about -0.22 of its total potential returns per unit of risk. Janus Balanced Fund is currently generating about -0.17 per unit of volatility. If you would invest 4,848 in Janus Balanced Fund on September 26, 2024 and sell it today you would lose (205.00) from holding Janus Balanced Fund or give up 4.23% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
General Motors vs. Janus Balanced Fund
Performance |
Timeline |
General Motors |
Janus Balanced |
GM and Janus Balanced Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with GM and Janus Balanced
The main advantage of trading using opposite GM and Janus Balanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Janus Balanced 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 Janus Balanced will offset losses from the drop in Janus Balanced's long position.The idea behind General Motors and Janus Balanced Fund 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.Janus Balanced vs. Janus Forty Fund | Janus Balanced vs. First Eagle Global | Janus Balanced vs. Pimco Income Fund | Janus Balanced vs. Columbia Balanced Fund |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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