Correlation Between 49327V2C7 and GMS

Can any of the company-specific risk be diversified away by investing in both 49327V2C7 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 49327V2C7 and GMS into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between KEY 49 08 AUG 32 and GMS Inc, you can compare the effects of market volatilities on 49327V2C7 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 49327V2C7 with a short position of GMS. Check out your portfolio center. Please also check ongoing floating volatility patterns of 49327V2C7 and GMS.

Diversification Opportunities for 49327V2C7 and GMS

0.02

Correlation Coefficient

49327V2C7  GMS

Significant diversification

The 3 months correlation between 49327V2C7 and GMS is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding KEY 49 08 AUG 32 and GMS Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GMS Inc and 49327V2C7 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 KEY 49 08 AUG 32 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 49327V2C7 i.e., 49327V2C7 and GMS go up and down completely randomly.

Pair Corralation between 49327V2C7 and GMS

Assuming the 90 days trading horizon 49327V2C7 is expected to generate 4.1 times less return on investment than GMS. In addition to that, 49327V2C7 is 1.75 times more volatile than GMS Inc. It trades about 0.01 of its total potential returns per unit of risk. GMS Inc is currently generating about 0.06 per unit of volatility. If you would invest  5,318  in GMS Inc on October 4, 2024 and sell it today you would earn a total of  3,150  from holding GMS Inc or generate 59.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	75.6%
Values	Daily Returns

KEY 49 08 AUG 32  vs.  GMS Inc

KEY 49 08

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KEY 49 08 AUG 32 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak 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 KEY 49 08 AUG 32 investors.

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 49327V2C7 and GMS

The main advantage of trading using opposite 49327V2C7 and GMS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 49327V2C7 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 KEY 49 08 AUG 32 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.