Correlation Between Gatekeeper Systems and Bombardier

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

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

Diversification Opportunities for Gatekeeper Systems and Bombardier

0.16

Correlation Coefficient

Gatekeeper Systems  Bombardier

Average diversification

The 3 months correlation between Gatekeeper and Bombardier is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Gatekeeper Systems and Bombardier in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bombardier and Gatekeeper Systems 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 Gatekeeper Systems are associated (or correlated) with Bombardier. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bombardier has no effect on the direction of Gatekeeper Systems i.e., Gatekeeper Systems and Bombardier go up and down completely randomly.

Pair Corralation between Gatekeeper Systems and Bombardier

Assuming the 90 days horizon Gatekeeper Systems is expected to generate 1.02 times more return on investment than Bombardier. However, Gatekeeper Systems is 1.02 times more volatile than Bombardier. It trades about 0.07 of its potential returns per unit of risk. Bombardier is currently generating about -0.01 per unit of risk. If you would invest  60.00  in Gatekeeper Systems on September 21, 2024 and sell it today you would earn a total of  6.00  from holding Gatekeeper Systems or generate 10.0% return on investment over 90 days.

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

Gatekeeper Systems  vs.  Bombardier

Gatekeeper Systems

Risk-Adjusted Performance

5 of 100

Modest

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

Bombardier

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Gatekeeper Systems and Bombardier

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

The idea behind Gatekeeper Systems and Bombardier 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.