Correlation Between Gelsenwasser and Five Below

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

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

Diversification Opportunities for Gelsenwasser and Five Below

-0.24

Correlation Coefficient

Gelsenwasser  Five Below

Very good diversification

The 3 months correlation between Gelsenwasser and Five is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Gelsenwasser AG and Five Below in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Five Below and Gelsenwasser 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 Gelsenwasser AG are associated (or correlated) with Five Below. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Five Below has no effect on the direction of Gelsenwasser i.e., Gelsenwasser and Five Below go up and down completely randomly.

Pair Corralation between Gelsenwasser and Five Below

Assuming the 90 days horizon Gelsenwasser AG is expected to generate 1.11 times more return on investment than Five Below. However, Gelsenwasser is 1.11 times more volatile than Five Below. It trades about -0.02 of its potential returns per unit of risk. Five Below is currently generating about -0.03 per unit of risk. If you would invest  83,323  in Gelsenwasser AG on October 4, 2024 and sell it today you would lose (30,323) from holding Gelsenwasser AG or give up 36.39% of portfolio value over 90 days.

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

Gelsenwasser AG  vs.  Five Below

Gelsenwasser AG

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Gelsenwasser AG are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Gelsenwasser may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Five Below

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Five Below are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Five Below reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Gelsenwasser and Five Below

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

The idea behind Gelsenwasser AG and Five Below 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.