Correlation Between Gap, and Kaltura

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

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

Diversification Opportunities for Gap, and Kaltura

0.8

Correlation Coefficient

Gap,  Kaltura

Very poor diversification

The 3 months correlation between Gap, and Kaltura is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding The Gap, and Kaltura in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kaltura 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 Kaltura. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kaltura has no effect on the direction of Gap, i.e., Gap, and Kaltura go up and down completely randomly.

Pair Corralation between Gap, and Kaltura

Considering the 90-day investment horizon The Gap, is expected to generate 0.92 times more return on investment than Kaltura. However, The Gap, is 1.09 times less risky than Kaltura. It trades about 0.06 of its potential returns per unit of risk. Kaltura is currently generating about 0.03 per unit of risk. If you would invest  1,053  in The Gap, on September 23, 2024 and sell it today you would earn a total of  1,358  from holding The Gap, or generate 128.96% 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.  Kaltura

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.

Kaltura

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Kaltura are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile basic indicators, Kaltura reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Gap, and Kaltura

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

The idea behind The Gap, and Kaltura 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.