Correlation Between GMS and Intelligent Living

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

By analyzing existing cross correlation between GMS Inc and Intelligent Living Application, you can compare the effects of market volatilities on GMS and Intelligent Living 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 Intelligent Living. Check out your portfolio center. Please also check ongoing floating volatility patterns of GMS and Intelligent Living.

Diversification Opportunities for GMS and Intelligent Living

0.87

Correlation Coefficient

GMS  Intelligent Living

Very poor diversification

The 3 months correlation between GMS and Intelligent is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding GMS Inc and Intelligent Living Application in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intelligent Living 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 Intelligent Living. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intelligent Living has no effect on the direction of GMS i.e., GMS and Intelligent Living go up and down completely randomly.

Pair Corralation between GMS and Intelligent Living

Considering the 90-day investment horizon GMS Inc is expected to generate 0.33 times more return on investment than Intelligent Living. However, GMS Inc is 3.06 times less risky than Intelligent Living. It trades about -0.1 of its potential returns per unit of risk. Intelligent Living Application is currently generating about -0.23 per unit of risk. If you would invest  8,500  in GMS Inc on December 29, 2024 and sell it today you would lose (971.00) from holding GMS Inc or give up 11.42% of portfolio value over 90 days.

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

GMS Inc  vs.  Intelligent Living Application

GMS Inc

Risk-Adjusted Performance

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.

Intelligent Living

Risk-Adjusted Performance

Very Weak

Over the last 90 days Intelligent Living Application has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with GMS and Intelligent Living

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

The idea behind GMS Inc and Intelligent Living Application 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.