Correlation Between Corporacion America and Gap,

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

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

Diversification Opportunities for Corporacion America and Gap,

0.27

Correlation Coefficient

Corporacion America  Gap,

Modest diversification

The 3 months correlation between Corporacion and Gap, is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Corporacion America Airports and The Gap, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gap, and Corporacion America 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 Corporacion America Airports 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 Corporacion America i.e., Corporacion America and Gap, go up and down completely randomly.

Pair Corralation between Corporacion America and Gap,

Given the investment horizon of 90 days Corporacion America is expected to generate 1.16 times less return on investment than Gap,. But when comparing it to its historical volatility, Corporacion America Airports is 1.44 times less risky than Gap,. It trades about 0.07 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  1,161  in The Gap, on November 20, 2024 and sell it today you would earn a total of  1,117  from holding The Gap, or generate 96.21% return on investment over 90 days.

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

Corporacion America Airports  vs.  The Gap,

Corporacion America

Risk-Adjusted Performance

Very Weak

Over the last 90 days Corporacion America Airports has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Corporacion America is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Gap,

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in The Gap, are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Gap, reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Corporacion America and Gap,

The main advantage of trading using opposite Corporacion America and Gap, positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Corporacion America 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 Corporacion America Airports 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.

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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.