Correlation Between Gap, and Par Pacific

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

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

Diversification Opportunities for Gap, and Par Pacific

-0.34

Correlation Coefficient

Gap,  Par Pacific

Very good diversification

The 3 months correlation between Gap, and Par is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding The Gap, and Par Pacific Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Par Pacific 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 Par Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Par Pacific Holdings has no effect on the direction of Gap, i.e., Gap, and Par Pacific go up and down completely randomly.

Pair Corralation between Gap, and Par Pacific

Considering the 90-day investment horizon The Gap, is expected to generate 1.45 times more return on investment than Par Pacific. However, Gap, is 1.45 times more volatile than Par Pacific Holdings. It trades about 0.09 of its potential returns per unit of risk. Par Pacific Holdings is currently generating about -0.03 per unit of risk. If you would invest  919.00  in The Gap, on October 3, 2024 and sell it today you would earn a total of  1,444  from holding The Gap, or generate 157.13% 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.  Par Pacific Holdings

Gap,

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in The Gap, are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Gap, reported solid returns over the last few months and may actually be approaching a breakup point.

Par Pacific Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Gap, and Par Pacific

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

The idea behind The Gap, and Par Pacific 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.

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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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.