Correlation Between Gap, and Banc Of

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

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

Diversification Opportunities for Gap, and Banc Of

0.85

Correlation Coefficient

Gap,  Banc Of

Very poor diversification

The 3 months correlation between Gap, and Banc is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding The Gap, and Banc of California in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banc of California and Gap, 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 The Gap, are associated (or correlated) with Banc Of. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banc of California has no effect on the direction of Gap, i.e., Gap, and Banc Of go up and down completely randomly.

Pair Corralation between Gap, and Banc Of

Considering the 90-day investment horizon The Gap, is expected to generate 5.25 times more return on investment than Banc Of. However, Gap, is 5.25 times more volatile than Banc of California. It trades about 0.11 of its potential returns per unit of risk. Banc of California is currently generating about 0.15 per unit of risk. If you would invest  2,152  in The Gap, on October 7, 2024 and sell it today you would earn a total of  270.00  from holding The Gap, or generate 12.55% return on investment over 90 days.

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

The Gap,  vs.  Banc of California

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.

Banc of California

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Banc of California are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, Banc Of may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Gap, and Banc Of

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

The idea behind The Gap, and Banc of California 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.