Correlation Between Gap, and ChargePoint Holdings

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

By analyzing existing cross correlation between The Gap, and ChargePoint Holdings, you can compare the effects of market volatilities on Gap, and ChargePoint Holdings 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 ChargePoint Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gap, and ChargePoint Holdings.

Diversification Opportunities for Gap, and ChargePoint Holdings

0.74

Correlation Coefficient

Gap,  ChargePoint Holdings

Poor diversification

The 3 months correlation between Gap, and ChargePoint is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding The Gap, and ChargePoint Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ChargePoint Holdings 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 ChargePoint Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ChargePoint Holdings has no effect on the direction of Gap, i.e., Gap, and ChargePoint Holdings go up and down completely randomly.

Pair Corralation between Gap, and ChargePoint Holdings

Considering the 90-day investment horizon The Gap, is expected to generate 0.41 times more return on investment than ChargePoint Holdings. However, The Gap, is 2.45 times less risky than ChargePoint Holdings. It trades about -0.13 of its potential returns per unit of risk. ChargePoint Holdings is currently generating about -0.19 per unit of risk. If you would invest  2,584  in The Gap, on December 4, 2024 and sell it today you would lose (449.00) from holding The Gap, or give up 17.38% of portfolio value over 90 days.

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

The Gap,  vs.  ChargePoint Holdings

Gap,

Risk-Adjusted Performance

Very Weak

Over the last 90 days The Gap, has generated negative risk-adjusted returns adding no value to investors with long positions. Even with fragile performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

ChargePoint Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days ChargePoint Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Gap, and ChargePoint Holdings

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

The idea behind The Gap, and ChargePoint Holdings 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.