Correlation Between Gap, and Upbound

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

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

Diversification Opportunities for Gap, and Upbound

0.86

Correlation Coefficient

Gap,  Upbound

Very poor diversification

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

Pair Corralation between Gap, and Upbound

Considering the 90-day investment horizon The Gap, is expected to generate 1.72 times more return on investment than Upbound. However, Gap, is 1.72 times more volatile than Upbound Group. It trades about -0.07 of its potential returns per unit of risk. Upbound Group is currently generating about -0.15 per unit of risk. If you would invest  2,396  in The Gap, on December 20, 2024 and sell it today you would lose (375.00) from holding The Gap, or give up 15.65% of portfolio value over 90 days.

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

The Gap,  vs.  Upbound Group

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 abnormal 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.

Upbound Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Upbound Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's fundamental drivers remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Gap, and Upbound

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

The idea behind The Gap, and Upbound Group 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.