Correlation Between Caesarstone and Gibraltar Industries

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

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

Diversification Opportunities for Caesarstone and Gibraltar Industries

0.03

Correlation Coefficient

Caesarstone  Gibraltar Industries

Significant diversification

The 3 months correlation between Caesarstone and Gibraltar is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Caesarstone and Gibraltar Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gibraltar Industries and Caesarstone 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 Caesarstone are associated (or correlated) with Gibraltar Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gibraltar Industries has no effect on the direction of Caesarstone i.e., Caesarstone and Gibraltar Industries go up and down completely randomly.

Pair Corralation between Caesarstone and Gibraltar Industries

Given the investment horizon of 90 days Caesarstone is expected to generate 1.81 times more return on investment than Gibraltar Industries. However, Caesarstone is 1.81 times more volatile than Gibraltar Industries. It trades about 0.04 of its potential returns per unit of risk. Gibraltar Industries is currently generating about 0.0 per unit of risk. If you would invest  480.00  in Caesarstone on September 13, 2024 and sell it today you would earn a total of  20.00  from holding Caesarstone or generate 4.17% return on investment over 90 days.

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

Caesarstone  vs.  Gibraltar Industries

Caesarstone

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Caesarstone are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting basic indicators, Caesarstone may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Gibraltar Industries

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Gibraltar Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental indicators, Gibraltar Industries is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Caesarstone and Gibraltar Industries

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

The idea behind Caesarstone and Gibraltar Industries 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..