Correlation Between Axalta Coating and Gap,

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

By analyzing existing cross correlation between Axalta Coating Systems and The Gap,, you can compare the effects of market volatilities on Axalta Coating and Gap, 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 Axalta Coating with a short position of Gap,. Check out your portfolio center. Please also check ongoing floating volatility patterns of Axalta Coating and Gap,.

Diversification Opportunities for Axalta Coating and Gap,

0.48

Correlation Coefficient

Axalta Coating  Gap,

Very weak diversification

The 3 months correlation between Axalta and Gap, is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Axalta Coating Systems and The Gap, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gap, and Axalta Coating 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 Axalta Coating Systems are associated (or correlated) with Gap,. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gap, has no effect on the direction of Axalta Coating i.e., Axalta Coating and Gap, go up and down completely randomly.

Pair Corralation between Axalta Coating and Gap,

Given the investment horizon of 90 days Axalta Coating is expected to generate 3.06 times less return on investment than Gap,. But when comparing it to its historical volatility, Axalta Coating Systems is 2.07 times less risky than Gap,. It trades about 0.04 of its potential returns per unit of risk. The Gap, is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,053  in The Gap, on September 24, 2024 and sell it today you would earn a total of  1,358  from holding The Gap, or generate 128.96% return on investment over 90 days.

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

Axalta Coating Systems  vs.  The Gap,

Axalta Coating Systems

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Axalta Coating Systems has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Axalta Coating is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Gap,

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in The Gap, are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, Gap, reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Axalta Coating and Gap,

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

The idea behind Axalta Coating Systems and The Gap, 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 Commodity Directory module to find actively traded commodities issued by global exchanges.