Correlation Between Gap, and Genuine Parts

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

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

Diversification Opportunities for Gap, and Genuine Parts

-0.37

Correlation Coefficient

Gap,  Genuine Parts

Very good diversification

The 3 months correlation between Gap, and Genuine is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding The Gap, and Genuine Parts Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genuine Parts 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 Genuine Parts. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genuine Parts has no effect on the direction of Gap, i.e., Gap, and Genuine Parts go up and down completely randomly.

Pair Corralation between Gap, and Genuine Parts

Considering the 90-day investment horizon The Gap, is expected to under-perform the Genuine Parts. In addition to that, Gap, is 2.56 times more volatile than Genuine Parts Co. It trades about -0.07 of its total potential returns per unit of risk. Genuine Parts Co is currently generating about 0.1 per unit of volatility. If you would invest  11,464  in Genuine Parts Co on December 18, 2024 and sell it today you would earn a total of  884.00  from holding Genuine Parts Co or generate 7.71% return on investment over 90 days.

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

The Gap,  vs.  Genuine Parts Co

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 weak 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.

Genuine Parts

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Genuine Parts Co are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal basic indicators, Genuine Parts may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Gap, and Genuine Parts

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

The idea behind The Gap, and Genuine Parts Co 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.