Correlation Between GMS and Grayscale Decentralized

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

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

Diversification Opportunities for GMS and Grayscale Decentralized

0.14

Correlation Coefficient

GMS  Grayscale Decentralized

Average diversification

The 3 months correlation between GMS and Grayscale is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding GMS Inc and Grayscale Decentralized Financ in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grayscale Decentralized and GMS 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 GMS Inc are associated (or correlated) with Grayscale Decentralized. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grayscale Decentralized has no effect on the direction of GMS i.e., GMS and Grayscale Decentralized go up and down completely randomly.

Pair Corralation between GMS and Grayscale Decentralized

Considering the 90-day investment horizon GMS Inc is expected to under-perform the Grayscale Decentralized. But the stock apears to be less risky and, when comparing its historical volatility, GMS Inc is 100.89 times less risky than Grayscale Decentralized. The stock trades about -0.25 of its potential returns per unit of risk. The Grayscale Decentralized Finance is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  2,400  in Grayscale Decentralized Finance on October 7, 2024 and sell it today you would earn a total of  1,490  from holding Grayscale Decentralized Finance or generate 62.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	97.62%
Values	Daily Returns

GMS Inc  vs.  Grayscale Decentralized Financ

GMS Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GMS Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's primary indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Grayscale Decentralized

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Grayscale Decentralized Finance are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Grayscale Decentralized reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GMS and Grayscale Decentralized

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

The idea behind GMS Inc and Grayscale Decentralized Finance 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.