Correlation Between Roper Technologies, and GP Investments

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

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

Diversification Opportunities for Roper Technologies, and GP Investments

0.19

Correlation Coefficient

Roper Technologies,  GP Investments

Average diversification

The 3 months correlation between Roper and GPIV33 is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Roper Technologies, and GP Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GP Investments and Roper Technologies, 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 Roper Technologies, are associated (or correlated) with GP Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GP Investments has no effect on the direction of Roper Technologies, i.e., Roper Technologies, and GP Investments go up and down completely randomly.

Pair Corralation between Roper Technologies, and GP Investments

Assuming the 90 days trading horizon Roper Technologies, is expected to generate 0.0 times more return on investment than GP Investments. However, Roper Technologies, is 243.39 times less risky than GP Investments. It trades about 0.13 of its potential returns per unit of risk. GP Investments is currently generating about -0.01 per unit of risk. If you would invest  33,267  in Roper Technologies, on December 23, 2024 and sell it today you would earn a total of  33.00  from holding Roper Technologies, or generate 0.1% return on investment over 90 days.

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

Roper Technologies,  vs.  GP Investments

Roper Technologies,

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Roper Technologies, are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Roper Technologies, is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

GP Investments

Risk-Adjusted Performance

Very Weak

Over the last 90 days GP Investments has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong forward indicators, GP Investments is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Roper Technologies, and GP Investments

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

The idea behind Roper Technologies, and GP Investments 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.