Correlation Between Gap, and Marine Products

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Can any of the company-specific risk be diversified away by investing in both Gap, and Marine Products 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 Marine Products into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Gap, and Marine Products, you can compare the effects of market volatilities on Gap, and Marine Products 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 Marine Products. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gap, and Marine Products.

Diversification Opportunities for Gap, and Marine Products

0.14
  Correlation Coefficient

Average diversification

The 3 months correlation between Gap, and Marine is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding The Gap, and Marine Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marine Products 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 Marine Products. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marine Products has no effect on the direction of Gap, i.e., Gap, and Marine Products go up and down completely randomly.

Pair Corralation between Gap, and Marine Products

Considering the 90-day investment horizon The Gap, is expected to generate 1.05 times more return on investment than Marine Products. However, Gap, is 1.05 times more volatile than Marine Products. It trades about -0.16 of its potential returns per unit of risk. Marine Products is currently generating about -0.22 per unit of risk. If you would invest  2,541  in The Gap, on October 10, 2024 and sell it today you would lose (160.00) from holding The Gap, or give up 6.3% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

The Gap,  vs.  Marine Products

 Performance 
       Timeline  
Gap, 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in The Gap, are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain basic indicators, Gap, reported solid returns over the last few months and may actually be approaching a breakup point.
Marine Products 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Marine Products has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Marine Products is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Gap, and Marine Products Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Gap, and Marine Products

The main advantage of trading using opposite Gap, and Marine Products positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gap, position performs unexpectedly, Marine Products 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 Marine Products will offset losses from the drop in Marine Products' long position.
The idea behind The Gap, and Marine Products 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.

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