Correlation Between Gulf Island and Macys

Can any of the company-specific risk be diversified away by investing in both Gulf Island and Macys 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 Macys 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 Macys Inc, you can compare the effects of market volatilities on Gulf Island and Macys 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 Macys. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gulf Island and Macys.

Diversification Opportunities for Gulf Island and Macys

0.52

Correlation Coefficient

Gulf Island  Macys

Very weak diversification

The 3 months correlation between Gulf and Macys is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Gulf Island Fabrication and Macys Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Macys Inc 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 Macys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Macys Inc has no effect on the direction of Gulf Island i.e., Gulf Island and Macys go up and down completely randomly.

Pair Corralation between Gulf Island and Macys

Given the investment horizon of 90 days Gulf Island Fabrication is expected to generate 1.42 times more return on investment than Macys. However, Gulf Island is 1.42 times more volatile than Macys Inc. It trades about 0.13 of its potential returns per unit of risk. Macys Inc is currently generating about 0.07 per unit of risk. If you would invest  564.00  in Gulf Island Fabrication on September 28, 2024 and sell it today you would earn a total of  145.00  from holding Gulf Island Fabrication or generate 25.71% return on investment over 90 days.

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

Gulf Island Fabrication  vs.  Macys Inc

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.

Macys Inc

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Macys Inc are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating primary indicators, Macys may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Gulf Island and Macys

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

The idea behind Gulf Island Fabrication and Macys 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.