Correlation Between GPS Old and Childrens Place

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

By analyzing existing cross correlation between GPS Old and Childrens Place, you can compare the effects of market volatilities on GPS Old and Childrens Place 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 GPS Old with a short position of Childrens Place. Check out your portfolio center. Please also check ongoing floating volatility patterns of GPS Old and Childrens Place.

Diversification Opportunities for GPS Old and Childrens Place

0.0

Correlation Coefficient

GPS Old  Childrens Place

Pay attention - limited upside

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

Pair Corralation between GPS Old and Childrens Place

If you would invest (100.00) in GPS Old on December 29, 2024 and sell it today you would earn a total of  100.00  from holding GPS Old or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

GPS Old  vs.  Childrens Place

GPS Old

Risk-Adjusted Performance

Very Weak

Over the last 90 days GPS Old has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, GPS Old is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Childrens Place

Risk-Adjusted Performance

Very Weak

Over the last 90 days Childrens Place has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's 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 GPS Old and Childrens Place

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

The idea behind GPS Old and Childrens Place 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.

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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.