Correlation Between Dividend and GMS

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

By analyzing existing cross correlation between Dividend 15 Split and GMS Inc, you can compare the effects of market volatilities on Dividend and GMS 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 Dividend with a short position of GMS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dividend and GMS.

Diversification Opportunities for Dividend and GMS

-0.24

Correlation Coefficient

Dividend  GMS

Very good diversification

The 3 months correlation between Dividend and GMS is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Dividend 15 Split and GMS Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GMS Inc and Dividend 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 Dividend 15 Split are associated (or correlated) with GMS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GMS Inc has no effect on the direction of Dividend i.e., Dividend and GMS go up and down completely randomly.

Pair Corralation between Dividend and GMS

Assuming the 90 days horizon Dividend 15 Split is expected to generate 0.58 times more return on investment than GMS. However, Dividend 15 Split is 1.73 times less risky than GMS. It trades about 0.22 of its potential returns per unit of risk. GMS Inc is currently generating about -0.7 per unit of risk. If you would invest  348.00  in Dividend 15 Split on October 8, 2024 and sell it today you would earn a total of  10.00  from holding Dividend 15 Split or generate 2.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

Dividend 15 Split  vs.  GMS Inc

Dividend 15 Split

Risk-Adjusted Performance

0 of 100

Solid

Over the last 90 days Dividend 15 Split has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly weak fundamental indicators, Dividend may actually be approaching a critical reversion point that can send shares even higher in February 2025.

GMS Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GMS Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's primary indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Dividend and GMS

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

The idea behind Dividend 15 Split and GMS Inc 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.