Correlation Between Gap, and Elutia

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

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

Diversification Opportunities for Gap, and Elutia

0.64

Correlation Coefficient

Gap,  Elutia

Poor diversification

The 3 months correlation between Gap, and Elutia is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding The Gap, and Elutia Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elutia Inc 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 Elutia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elutia Inc has no effect on the direction of Gap, i.e., Gap, and Elutia go up and down completely randomly.

Pair Corralation between Gap, and Elutia

Considering the 90-day investment horizon Gap, is expected to generate 1.13 times less return on investment than Elutia. But when comparing it to its historical volatility, The Gap, is 1.88 times less risky than Elutia. It trades about 0.06 of its potential returns per unit of risk. Elutia Inc is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  407.00  in Elutia Inc on September 26, 2024 and sell it today you would earn a total of  25.00  from holding Elutia Inc or generate 6.14% 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.  Elutia Inc

Gap,

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in The Gap, are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, Gap, reported solid returns over the last few months and may actually be approaching a breakup point.

Elutia Inc

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Elutia Inc are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Elutia unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Gap, and Elutia

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

The idea behind The Gap, and Elutia 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.