Correlation Between Gap and Hibbett Sports

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

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

Diversification Opportunities for Gap and Hibbett Sports

0.21

Correlation Coefficient

Gap  Hibbett Sports

Modest diversification

The 3 months correlation between Gap and Hibbett is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Gap Inc and Hibbett Sports in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hibbett Sports and Gap 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 Gap Inc are associated (or correlated) with Hibbett Sports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hibbett Sports has no effect on the direction of Gap i.e., Gap and Hibbett Sports go up and down completely randomly.

Pair Corralation between Gap and Hibbett Sports

If you would invest  8,749  in Hibbett Sports on September 1, 2024 and sell it today you would earn a total of  0.00  from holding Hibbett Sports or generate 0.0% return on investment over 90 days.

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

Gap Inc  vs.  Hibbett Sports

Gap Inc

Risk-Adjusted Performance

0 of 100

Very Weak

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

Hibbett Sports

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hibbett Sports has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, Hibbett Sports is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Gap and Hibbett Sports

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

The idea behind Gap Inc and Hibbett Sports 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.

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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..