Correlation Between 548661EF0 and GMS

Can any of the company-specific risk be diversified away by investing in both 548661EF0 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 548661EF0 and GMS into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between LOW 445 01 APR 62 and GMS Inc, you can compare the effects of market volatilities on 548661EF0 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 548661EF0 with a short position of GMS. Check out your portfolio center. Please also check ongoing floating volatility patterns of 548661EF0 and GMS.

Diversification Opportunities for 548661EF0 and GMS

-0.63

Correlation Coefficient

548661EF0  GMS

Excellent diversification

The 3 months correlation between 548661EF0 and GMS is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding LOW 445 01 APR 62 and GMS Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GMS Inc and 548661EF0 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 LOW 445 01 APR 62 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 548661EF0 i.e., 548661EF0 and GMS go up and down completely randomly.

Pair Corralation between 548661EF0 and GMS

Assuming the 90 days trading horizon LOW 445 01 APR 62 is expected to under-perform the GMS. But the bond apears to be less risky and, when comparing its historical volatility, LOW 445 01 APR 62 is 1.14 times less risky than GMS. The bond trades about -0.06 of its potential returns per unit of risk. The GMS Inc is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  8,245  in GMS Inc on September 5, 2024 and sell it today you would earn a total of  2,023  from holding GMS Inc or generate 24.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	93.75%
Values	Daily Returns

LOW 445 01 APR 62  vs.  GMS Inc

LOW 445 01

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LOW 445 01 APR 62 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 548661EF0 is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

GMS Inc

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in GMS Inc are ranked lower than 17 (%) 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 548661EF0 and GMS

The main advantage of trading using opposite 548661EF0 and GMS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 548661EF0 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 LOW 445 01 APR 62 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..