Correlation Between 23355LAL0 and GMS

Can any of the company-specific risk be diversified away by investing in both 23355LAL0 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 23355LAL0 and GMS into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between DXC 18 15 SEP 26 and GMS Inc, you can compare the effects of market volatilities on 23355LAL0 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 23355LAL0 with a short position of GMS. Check out your portfolio center. Please also check ongoing floating volatility patterns of 23355LAL0 and GMS.

Diversification Opportunities for 23355LAL0 and GMS

-0.39

Correlation Coefficient

23355LAL0  GMS

Very good diversification

The 3 months correlation between 23355LAL0 and GMS is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding DXC 18 15 SEP 26 and GMS Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GMS Inc and 23355LAL0 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 DXC 18 15 SEP 26 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 23355LAL0 i.e., 23355LAL0 and GMS go up and down completely randomly.

Pair Corralation between 23355LAL0 and GMS

Assuming the 90 days trading horizon DXC 18 15 SEP 26 is expected to under-perform the GMS. But the bond apears to be less risky and, when comparing its historical volatility, DXC 18 15 SEP 26 is 1.45 times less risky than GMS. The bond trades about -0.13 of its potential returns per unit of risk. The GMS Inc is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  8,376  in GMS Inc on September 3, 2024 and sell it today you would earn a total of  1,659  from holding GMS Inc or generate 19.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	75.0%
Values	Daily Returns

DXC 18 15 SEP 26  vs.  GMS Inc

DXC 18 15

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DXC 18 15 SEP 26 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for DXC 18 15 SEP 26 investors.

GMS Inc

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GMS Inc are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak primary indicators, GMS unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with 23355LAL0 and GMS

The main advantage of trading using opposite 23355LAL0 and GMS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 23355LAL0 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 DXC 18 15 SEP 26 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.