Correlation Between GMS and Microbot Medical
Can any of the company-specific risk be diversified away by investing in both GMS and Microbot Medical 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 Microbot Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GMS Inc and Microbot Medical, you can compare the effects of market volatilities on GMS and Microbot Medical 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 Microbot Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of GMS and Microbot Medical.
Diversification Opportunities for GMS and Microbot Medical
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between GMS and Microbot is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding GMS Inc and Microbot Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microbot Medical 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 Microbot Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microbot Medical has no effect on the direction of GMS i.e., GMS and Microbot Medical go up and down completely randomly.
Pair Corralation between GMS and Microbot Medical
Considering the 90-day investment horizon GMS Inc is expected to under-perform the Microbot Medical. But the stock apears to be less risky and, when comparing its historical volatility, GMS Inc is 9.55 times less risky than Microbot Medical. The stock trades about -0.29 of its potential returns per unit of risk. The Microbot Medical is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 99.00 in Microbot Medical on December 4, 2024 and sell it today you would earn a total of 37.00 from holding Microbot Medical or generate 37.37% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
GMS Inc vs. Microbot Medical
Performance |
Timeline |
GMS Inc |
Microbot Medical |
GMS and Microbot Medical Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with GMS and Microbot Medical
The main advantage of trading using opposite GMS and Microbot Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GMS position performs unexpectedly, Microbot Medical 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 Microbot Medical will offset losses from the drop in Microbot Medical's long position.GMS vs. Quanex Building Products | GMS vs. Apogee Enterprises | GMS vs. Azek Company | GMS vs. Beacon Roofing Supply |
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Check out your portfolio center.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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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