Correlation Between Lakeland Industries and Gap,

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

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

Diversification Opportunities for Lakeland Industries and Gap,

0.75

Correlation Coefficient

Lakeland Industries  Gap,

Poor diversification

The 3 months correlation between Lakeland and Gap, is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Lakeland Industries and The Gap, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gap, and Lakeland Industries 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 Lakeland Industries are associated (or correlated) with Gap,. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gap, has no effect on the direction of Lakeland Industries i.e., Lakeland Industries and Gap, go up and down completely randomly.

Pair Corralation between Lakeland Industries and Gap,

Given the investment horizon of 90 days Lakeland Industries is expected to generate 0.91 times more return on investment than Gap,. However, Lakeland Industries is 1.1 times less risky than Gap,. It trades about 0.2 of its potential returns per unit of risk. The Gap, is currently generating about 0.08 per unit of risk. If you would invest  1,922  in Lakeland Industries on October 4, 2024 and sell it today you would earn a total of  633.00  from holding Lakeland Industries or generate 32.93% return on investment over 90 days.

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

Lakeland Industries  vs.  The Gap,

Lakeland Industries

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Lakeland Industries are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady forward-looking signals, Lakeland Industries exhibited solid returns over the last few months and may actually be approaching a breakup point.

Gap,

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in The Gap, are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, Gap, reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lakeland Industries and Gap,

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

The idea behind Lakeland Industries and The Gap, 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.