Correlation Between Gap, and Assurant

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

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

Diversification Opportunities for Gap, and Assurant

0.77

Correlation Coefficient

Gap,  Assurant

Poor diversification

The 3 months correlation between Gap, and Assurant is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding The Gap, and Assurant in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Assurant and Gap, 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 The Gap, are associated (or correlated) with Assurant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Assurant has no effect on the direction of Gap, i.e., Gap, and Assurant go up and down completely randomly.

Pair Corralation between Gap, and Assurant

Considering the 90-day investment horizon The Gap, is expected to generate 1.9 times more return on investment than Assurant. However, Gap, is 1.9 times more volatile than Assurant. It trades about 0.12 of its potential returns per unit of risk. Assurant is currently generating about 0.14 per unit of risk. If you would invest  2,026  in The Gap, on September 16, 2024 and sell it today you would earn a total of  403.00  from holding The Gap, or generate 19.89% return on investment over 90 days.

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

The Gap,  vs.  Assurant

Gap,

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in The Gap, are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent basic indicators, Gap, reported solid returns over the last few months and may actually be approaching a breakup point.

Assurant

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Assurant are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating forward indicators, Assurant showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Gap, and Assurant

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

The idea behind The Gap, and Assurant 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.