Correlation Between Alphabet and GB Group

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

By analyzing existing cross correlation between Alphabet Inc Class C and GB Group plc, you can compare the effects of market volatilities on Alphabet and GB Group 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 Alphabet with a short position of GB Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alphabet and GB Group.

Diversification Opportunities for Alphabet and GB Group

0.81

Correlation Coefficient

Alphabet  GB Group

Very poor diversification

The 3 months correlation between Alphabet and GBG is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Alphabet Inc Class C and GB Group plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GB Group plc and Alphabet 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 Alphabet Inc Class C are associated (or correlated) with GB Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GB Group plc has no effect on the direction of Alphabet i.e., Alphabet and GB Group go up and down completely randomly.

Pair Corralation between Alphabet and GB Group

Given the investment horizon of 90 days Alphabet Inc Class C is expected to under-perform the GB Group. In addition to that, Alphabet is 1.26 times more volatile than GB Group plc. It trades about -0.12 of its total potential returns per unit of risk. GB Group plc is currently generating about -0.11 per unit of volatility. If you would invest  33,920  in GB Group plc on December 29, 2024 and sell it today you would lose (3,760) from holding GB Group plc or give up 11.08% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	93.85%
Values	Daily Returns

Alphabet Inc Class C  vs.  GB Group plc

Alphabet Class C

Risk-Adjusted Performance

Very Weak

Over the last 90 days Alphabet Inc Class C has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting 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.

GB Group plc

Risk-Adjusted Performance

Very Weak

Over the last 90 days GB Group plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Alphabet and GB Group

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

The idea behind Alphabet Inc Class C and GB Group plc 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.