Correlation Between Gulf Island and Iconic Sports

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

By analyzing existing cross correlation between Gulf Island Fabrication and Iconic Sports Acquisition, you can compare the effects of market volatilities on Gulf Island and Iconic Sports 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 Gulf Island with a short position of Iconic Sports. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gulf Island and Iconic Sports.

Diversification Opportunities for Gulf Island and Iconic Sports

0.78

Correlation Coefficient

Gulf Island  Iconic Sports

Poor diversification

The 3 months correlation between Gulf and Iconic is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Gulf Island Fabrication and Iconic Sports Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iconic Sports Acquisition and Gulf Island 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 Gulf Island Fabrication are associated (or correlated) with Iconic Sports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iconic Sports Acquisition has no effect on the direction of Gulf Island i.e., Gulf Island and Iconic Sports go up and down completely randomly.

Pair Corralation between Gulf Island and Iconic Sports

If you would invest  620.00  in Gulf Island Fabrication on September 28, 2024 and sell it today you would earn a total of  89.00  from holding Gulf Island Fabrication or generate 14.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	0.95%
Values	Daily Returns

Gulf Island Fabrication  vs.  Iconic Sports Acquisition

Gulf Island Fabrication

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gulf Island Fabrication are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating technical and fundamental indicators, Gulf Island demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Iconic Sports Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Iconic Sports Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Iconic Sports is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Gulf Island and Iconic Sports

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

The idea behind Gulf Island Fabrication and Iconic Sports Acquisition 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.