Correlation Between Gap, and Pekin Life

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

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

Diversification Opportunities for Gap, and Pekin Life

0.86

Correlation Coefficient

Gap,  Pekin Life

Very poor diversification

The 3 months correlation between Gap, and Pekin is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding The Gap, and Pekin Life Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pekin Life Insurance 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 Pekin Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pekin Life Insurance has no effect on the direction of Gap, i.e., Gap, and Pekin Life go up and down completely randomly.

Pair Corralation between Gap, and Pekin Life

Considering the 90-day investment horizon The Gap, is expected to generate 25.19 times more return on investment than Pekin Life. However, Gap, is 25.19 times more volatile than Pekin Life Insurance. It trades about 0.04 of its potential returns per unit of risk. Pekin Life Insurance is currently generating about 0.06 per unit of risk. If you would invest  2,015  in The Gap, on October 7, 2024 and sell it today you would earn a total of  407.00  from holding The Gap, or generate 20.2% 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.  Pekin Life Insurance

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.

Pekin Life Insurance

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pekin Life Insurance are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy forward indicators, Pekin Life is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Gap, and Pekin Life

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

The idea behind The Gap, and Pekin Life Insurance 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.