Correlation Between Pinterest and GMS

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

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

Diversification Opportunities for Pinterest and GMS

-0.24

Correlation Coefficient

Pinterest  GMS

Very good diversification

The 3 months correlation between Pinterest and GMS is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Pinterest and GMS Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GMS Inc and Pinterest 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 Pinterest are associated (or correlated) with GMS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GMS Inc has no effect on the direction of Pinterest i.e., Pinterest and GMS go up and down completely randomly.

Pair Corralation between Pinterest and GMS

Given the investment horizon of 90 days Pinterest is expected to under-perform the GMS. In addition to that, Pinterest is 1.45 times more volatile than GMS Inc. It trades about -0.05 of its total potential returns per unit of risk. GMS Inc is currently generating about -0.01 per unit of volatility. If you would invest  8,907  in GMS Inc on September 26, 2024 and sell it today you would lose (227.00) from holding GMS Inc or give up 2.55% of portfolio value over 90 days.

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

Pinterest  vs.  GMS Inc

Pinterest

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pinterest has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

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.

Pair Trading with Pinterest and GMS

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

The idea behind Pinterest and GMS 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.