Correlation Between GMS and MASSMU

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

By analyzing existing cross correlation between GMS Inc and MASSMU 5077 15 FEB 69, you can compare the effects of market volatilities on GMS and MASSMU 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 GMS with a short position of MASSMU. Check out your portfolio center. Please also check ongoing floating volatility patterns of GMS and MASSMU.

Diversification Opportunities for GMS and MASSMU

0.04

Correlation Coefficient

GMS  MASSMU

Significant diversification

The 3 months correlation between GMS and MASSMU is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding GMS Inc and MASSMU 5077 15 FEB 69 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MASSMU 5077 15 and GMS 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 GMS Inc are associated (or correlated) with MASSMU. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MASSMU 5077 15 has no effect on the direction of GMS i.e., GMS and MASSMU go up and down completely randomly.

Pair Corralation between GMS and MASSMU

Considering the 90-day investment horizon GMS Inc is expected to under-perform the MASSMU. But the stock apears to be less risky and, when comparing its historical volatility, GMS Inc is 1.04 times less risky than MASSMU. The stock trades about -0.52 of its potential returns per unit of risk. The MASSMU 5077 15 FEB 69 is currently generating about -0.23 of returns per unit of risk over similar time horizon. If you would invest  9,082  in MASSMU 5077 15 FEB 69 on September 25, 2024 and sell it today you would lose (146.00) from holding MASSMU 5077 15 FEB 69 or give up 1.61% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	19.05%
Values	Daily Returns

GMS Inc  vs.  MASSMU 5077 15 FEB 69

GMS Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GMS Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable primary indicators, GMS is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

MASSMU 5077 15

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MASSMU 5077 15 FEB 69 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for MASSMU 5077 15 FEB 69 investors.

Pair Trading with GMS and MASSMU

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

The idea behind GMS Inc and MASSMU 5077 15 FEB 69 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 Transaction History module to view history of all your transactions and understand their impact on performance.