Correlation Between Gap, and GENERAL

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

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

Diversification Opportunities for Gap, and GENERAL

-0.3

Correlation Coefficient

Gap,  GENERAL

Very good diversification

The 3 months correlation between Gap, and GENERAL is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding The Gap, and GENERAL ELECTRIC CO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GENERAL ELECTRIC 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 GENERAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GENERAL ELECTRIC has no effect on the direction of Gap, i.e., Gap, and GENERAL go up and down completely randomly.

Pair Corralation between Gap, and GENERAL

Considering the 90-day investment horizon The Gap, is expected to under-perform the GENERAL. In addition to that, Gap, is 3.23 times more volatile than GENERAL ELECTRIC CO. It trades about -0.07 of its total potential returns per unit of risk. GENERAL ELECTRIC CO is currently generating about -0.05 per unit of volatility. If you would invest  9,315  in GENERAL ELECTRIC CO on December 22, 2024 and sell it today you would lose (215.00) from holding GENERAL ELECTRIC CO or give up 2.31% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	68.33%
Values	Daily Returns

The Gap,  vs.  GENERAL ELECTRIC CO

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 unfluctuating 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.

GENERAL ELECTRIC

Risk-Adjusted Performance

OK

Over the last 90 days GENERAL ELECTRIC CO has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, GENERAL is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Gap, and GENERAL

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

The idea behind The Gap, and GENERAL ELECTRIC CO 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.