Correlation Between GOME Retail and Tractor Supply

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

By analyzing existing cross correlation between GOME Retail Holdings and Tractor Supply, you can compare the effects of market volatilities on GOME Retail and Tractor Supply 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 GOME Retail with a short position of Tractor Supply. Check out your portfolio center. Please also check ongoing floating volatility patterns of GOME Retail and Tractor Supply.

Diversification Opportunities for GOME Retail and Tractor Supply

-0.43

Correlation Coefficient

GOME Retail  Tractor Supply

Very good diversification

The 3 months correlation between GOME and Tractor is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding GOME Retail Holdings and Tractor Supply in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tractor Supply and GOME Retail 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 GOME Retail Holdings are associated (or correlated) with Tractor Supply. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tractor Supply has no effect on the direction of GOME Retail i.e., GOME Retail and Tractor Supply go up and down completely randomly.

Pair Corralation between GOME Retail and Tractor Supply

If you would invest  5,270  in Tractor Supply on October 27, 2024 and sell it today you would earn a total of  58.00  from holding Tractor Supply or generate 1.1% return on investment over 90 days.

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

GOME Retail Holdings  vs.  Tractor Supply

GOME Retail Holdings

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in GOME Retail Holdings are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, GOME Retail unveiled solid returns over the last few months and may actually be approaching a breakup point.

Tractor Supply

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Tractor Supply are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Tractor Supply may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with GOME Retail and Tractor Supply

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

The idea behind GOME Retail Holdings and Tractor Supply 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.