Correlation Between GMS and Jeld Wen

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

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

Diversification Opportunities for GMS and Jeld Wen

0.79

Correlation Coefficient

GMS  Jeld Wen

Poor diversification

The 3 months correlation between GMS and Jeld is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding GMS Inc and Jeld Wen Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jeld Wen Holding 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 Jeld Wen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jeld Wen Holding has no effect on the direction of GMS i.e., GMS and Jeld Wen go up and down completely randomly.

Pair Corralation between GMS and Jeld Wen

Considering the 90-day investment horizon GMS Inc is expected to generate 0.39 times more return on investment than Jeld Wen. However, GMS Inc is 2.54 times less risky than Jeld Wen. It trades about -0.11 of its potential returns per unit of risk. Jeld Wen Holding is currently generating about -0.09 per unit of risk. If you would invest  8,639  in GMS Inc on December 26, 2024 and sell it today you would lose (1,036) from holding GMS Inc or give up 11.99% of portfolio value over 90 days.

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

GMS Inc  vs.  Jeld Wen Holding

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.

Jeld Wen Holding

Risk-Adjusted Performance

Very Weak

Over the last 90 days Jeld Wen Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's essential indicators 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 GMS and Jeld Wen

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

The idea behind GMS Inc and Jeld Wen Holding 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.