Correlation Between Gordon Auto and Anderson Industrial

Can any of the company-specific risk be diversified away by investing in both Gordon Auto and Anderson Industrial 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 Gordon Auto and Anderson Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Gordon Auto Body and Anderson Industrial Corp, you can compare the effects of market volatilities on Gordon Auto and Anderson Industrial 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 Gordon Auto with a short position of Anderson Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gordon Auto and Anderson Industrial.

Diversification Opportunities for Gordon Auto and Anderson Industrial

-0.64

Correlation Coefficient

Gordon Auto  Anderson Industrial

Excellent diversification

The 3 months correlation between Gordon and Anderson is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Gordon Auto Body and Anderson Industrial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anderson Industrial Corp and Gordon Auto 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 Gordon Auto Body are associated (or correlated) with Anderson Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anderson Industrial Corp has no effect on the direction of Gordon Auto i.e., Gordon Auto and Anderson Industrial go up and down completely randomly.

Pair Corralation between Gordon Auto and Anderson Industrial

Assuming the 90 days trading horizon Gordon Auto Body is expected to generate 0.95 times more return on investment than Anderson Industrial. However, Gordon Auto Body is 1.06 times less risky than Anderson Industrial. It trades about 0.03 of its potential returns per unit of risk. Anderson Industrial Corp is currently generating about -0.23 per unit of risk. If you would invest  3,630  in Gordon Auto Body on October 25, 2024 and sell it today you would earn a total of  95.00  from holding Gordon Auto Body or generate 2.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Gordon Auto Body  vs.  Anderson Industrial Corp

Gordon Auto Body

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Gordon Auto Body are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Gordon Auto is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Anderson Industrial Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Anderson Industrial Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Gordon Auto and Anderson Industrial

The main advantage of trading using opposite Gordon Auto and Anderson Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gordon Auto position performs unexpectedly, Anderson Industrial 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 Anderson Industrial will offset losses from the drop in Anderson Industrial's long position.

The idea behind Gordon Auto Body and Anderson Industrial 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.