Correlation Between GDI Integrated and Transcontinental

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

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

Diversification Opportunities for GDI Integrated and Transcontinental

0.17

Correlation Coefficient

GDI Integrated  Transcontinental

Average diversification

The 3 months correlation between GDI and Transcontinental is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding GDI Integrated and Transcontinental in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transcontinental and GDI Integrated 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 GDI Integrated are associated (or correlated) with Transcontinental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transcontinental has no effect on the direction of GDI Integrated i.e., GDI Integrated and Transcontinental go up and down completely randomly.

Pair Corralation between GDI Integrated and Transcontinental

Assuming the 90 days trading horizon GDI Integrated is expected to generate 2.13 times less return on investment than Transcontinental. In addition to that, GDI Integrated is 1.12 times more volatile than Transcontinental. It trades about 0.04 of its total potential returns per unit of risk. Transcontinental is currently generating about 0.1 per unit of volatility. If you would invest  1,635  in Transcontinental on September 14, 2024 and sell it today you would earn a total of  166.00  from holding Transcontinental or generate 10.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

GDI Integrated  vs.  Transcontinental

GDI Integrated

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in GDI Integrated are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy forward indicators, GDI Integrated is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Transcontinental

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Transcontinental are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Transcontinental may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with GDI Integrated and Transcontinental

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

The idea behind GDI Integrated and Transcontinental 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .