Correlation Between GMS and Paiute Oil

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

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

Diversification Opportunities for GMS and Paiute Oil

0.0

Correlation Coefficient

GMS  Paiute Oil

Pay attention - limited upside

The 3 months correlation between GMS and Paiute is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding GMS Inc and Paiute Oil Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Paiute Oil Mining 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 Paiute Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Paiute Oil Mining has no effect on the direction of GMS i.e., GMS and Paiute Oil go up and down completely randomly.

Pair Corralation between GMS and Paiute Oil

Considering the 90-day investment horizon GMS Inc is expected to generate 0.08 times more return on investment than Paiute Oil. However, GMS Inc is 13.16 times less risky than Paiute Oil. It trades about -0.19 of its potential returns per unit of risk. Paiute Oil Mining is currently generating about -0.22 per unit of risk. If you would invest  10,142  in GMS Inc on September 13, 2024 and sell it today you would lose (702.00) from holding GMS Inc or give up 6.92% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

GMS Inc  vs.  Paiute Oil Mining

GMS Inc

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in GMS Inc are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak primary indicators, GMS may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Paiute Oil Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Paiute Oil Mining has generated negative risk-adjusted returns adding no value to investors with long positions. Even with uncertain performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with GMS and Paiute Oil

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

The idea behind GMS Inc and Paiute Oil Mining 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.