Correlation Between GMS and Wabash National
Can any of the company-specific risk be diversified away by investing in both GMS and Wabash National 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 Wabash National into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GMS Inc and Wabash National, you can compare the effects of market volatilities on GMS and Wabash National 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 Wabash National. Check out your portfolio center. Please also check ongoing floating volatility patterns of GMS and Wabash National.
Diversification Opportunities for GMS and Wabash National
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between GMS and Wabash is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding GMS Inc and Wabash National in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wabash National 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 Wabash National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wabash National has no effect on the direction of GMS i.e., GMS and Wabash National go up and down completely randomly.
Pair Corralation between GMS and Wabash National
Considering the 90-day investment horizon GMS Inc is expected to generate 0.82 times more return on investment than Wabash National. However, GMS Inc is 1.22 times less risky than Wabash National. It trades about 0.16 of its potential returns per unit of risk. Wabash National is currently generating about 0.04 per unit of risk. If you would invest 8,245 in GMS Inc on September 7, 2024 and sell it today you would earn a total of 1,531 from holding GMS Inc or generate 18.57% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
GMS Inc vs. Wabash National
Performance |
Timeline |
GMS Inc |
Wabash National |
GMS and Wabash National Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with GMS and Wabash National
The main advantage of trading using opposite GMS and Wabash National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GMS position performs unexpectedly, Wabash National 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 Wabash National will offset losses from the drop in Wabash National's long position.GMS vs. Quanex Building Products | GMS vs. Apogee Enterprises | GMS vs. Azek Company | GMS vs. Beacon Roofing Supply |
Wabash National vs. Caterpillar | Wabash National vs. AGCO Corporation | Wabash National vs. Deere Company |
Check out your portfolio center.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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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