Correlation Between Tokyu REIT and GMS

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

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

Diversification Opportunities for Tokyu REIT and GMS

-0.29

Correlation Coefficient

Tokyu REIT  GMS

Very good diversification

The 3 months correlation between Tokyu and GMS is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Tokyu REIT and GMS Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GMS Inc and Tokyu REIT 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 Tokyu REIT are associated (or correlated) with GMS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GMS Inc has no effect on the direction of Tokyu REIT i.e., Tokyu REIT and GMS go up and down completely randomly.

Pair Corralation between Tokyu REIT and GMS

If you would invest  137,857  in Tokyu REIT on October 22, 2024 and sell it today you would earn a total of  0.00  from holding Tokyu REIT or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	5.26%
Values	Daily Returns

Tokyu REIT  vs.  GMS Inc

Tokyu REIT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tokyu REIT has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Tokyu REIT is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

GMS Inc

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Tokyu REIT and GMS

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

The idea behind Tokyu REIT and GMS Inc 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.