Correlation Between Transocean and Gap,

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

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

Diversification Opportunities for Transocean and Gap,

0.46

Correlation Coefficient

Transocean  Gap,

Very weak diversification

The 3 months correlation between Transocean and Gap, is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Transocean and The Gap, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gap, and Transocean 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 Transocean 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 Transocean i.e., Transocean and Gap, go up and down completely randomly.

Pair Corralation between Transocean and Gap,

Considering the 90-day investment horizon Transocean is expected to under-perform the Gap,. In addition to that, Transocean is 1.23 times more volatile than The Gap,. It trades about -0.25 of its total potential returns per unit of risk. The Gap, is currently generating about -0.03 per unit of volatility. If you would invest  2,346  in The Gap, on December 2, 2024 and sell it today you would lose (85.00) from holding The Gap, or give up 3.62% of portfolio value over 90 days.

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

Transocean  vs.  The Gap,

Transocean

Risk-Adjusted Performance

Very Weak

Over the last 90 days Transocean has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's forward 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.

Gap,

Risk-Adjusted Performance

Very Weak

Over the last 90 days The Gap, has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest unfluctuating performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Transocean and Gap,

The main advantage of trading using opposite Transocean and Gap, positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transocean 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 Transocean 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.