Correlation Between Gannett and Ardelyx

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

By analyzing existing cross correlation between Gannett Co and Ardelyx, you can compare the effects of market volatilities on Gannett and Ardelyx 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 Gannett with a short position of Ardelyx. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gannett and Ardelyx.

Diversification Opportunities for Gannett and Ardelyx

0.38

Correlation Coefficient

Gannett  Ardelyx

Weak diversification

The 3 months correlation between Gannett and Ardelyx is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Gannett Co and Ardelyx in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ardelyx and Gannett 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 Gannett Co are associated (or correlated) with Ardelyx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ardelyx has no effect on the direction of Gannett i.e., Gannett and Ardelyx go up and down completely randomly.

Pair Corralation between Gannett and Ardelyx

Considering the 90-day investment horizon Gannett Co is expected to generate 0.82 times more return on investment than Ardelyx. However, Gannett Co is 1.21 times less risky than Ardelyx. It trades about 0.0 of its potential returns per unit of risk. Ardelyx is currently generating about -0.01 per unit of risk. If you would invest  531.00  in Gannett Co on October 10, 2024 and sell it today you would lose (27.00) from holding Gannett Co or give up 5.08% of portfolio value over 90 days.

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

Gannett Co  vs.  Ardelyx

Gannett

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gannett Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental indicators, Gannett is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Ardelyx

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Gannett and Ardelyx

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

The idea behind Gannett Co and Ardelyx 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.