Correlation Between Fluent and GMS

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

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

Diversification Opportunities for Fluent and GMS

0.27

Correlation Coefficient

Fluent  GMS

Modest diversification

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

Pair Corralation between Fluent and GMS

Given the investment horizon of 90 days Fluent Inc is expected to generate 2.73 times more return on investment than GMS. However, Fluent is 2.73 times more volatile than GMS Inc. It trades about -0.01 of its potential returns per unit of risk. GMS Inc is currently generating about -0.69 per unit of risk. If you would invest  276.00  in Fluent Inc on October 11, 2024 and sell it today you would lose (4.00) from holding Fluent Inc or give up 1.45% of portfolio value over 90 days.

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

Fluent Inc  vs.  GMS Inc

Fluent Inc

Risk-Adjusted Performance

0 of 100

Very Weak

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

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 Fluent and GMS

The main advantage of trading using opposite Fluent and GMS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fluent 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 Fluent Inc 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..