Correlation Between Gamma Communications and AM EAGLE
Can any of the company-specific risk be diversified away by investing in both Gamma Communications and AM EAGLE 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 Gamma Communications and AM EAGLE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gamma Communications plc and AM EAGLE OUTFITTERS, you can compare the effects of market volatilities on Gamma Communications and AM EAGLE 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 Gamma Communications with a short position of AM EAGLE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gamma Communications and AM EAGLE.
Diversification Opportunities for Gamma Communications and AM EAGLE
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Gamma and AFG is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Gamma Communications plc and AM EAGLE OUTFITTERS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AM EAGLE OUTFITTERS and Gamma Communications 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 Gamma Communications plc are associated (or correlated) with AM EAGLE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AM EAGLE OUTFITTERS has no effect on the direction of Gamma Communications i.e., Gamma Communications and AM EAGLE go up and down completely randomly.
Pair Corralation between Gamma Communications and AM EAGLE
Assuming the 90 days horizon Gamma Communications plc is expected to generate 0.8 times more return on investment than AM EAGLE. However, Gamma Communications plc is 1.25 times less risky than AM EAGLE. It trades about 0.06 of its potential returns per unit of risk. AM EAGLE OUTFITTERS is currently generating about 0.03 per unit of risk. If you would invest 1,154 in Gamma Communications plc on September 20, 2024 and sell it today you would earn a total of 776.00 from holding Gamma Communications plc or generate 67.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gamma Communications plc vs. AM EAGLE OUTFITTERS
Performance |
| Timeline |
| Gamma Communications plc |
| AM EAGLE OUTFITTERS |
Gamma Communications and AM EAGLE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gamma Communications and AM EAGLE
The main advantage of trading using opposite Gamma Communications and AM EAGLE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gamma Communications position performs unexpectedly, AM EAGLE 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 AM EAGLE will offset losses from the drop in AM EAGLE's long position.| Gamma Communications vs. American Airlines Group | Gamma Communications vs. COMMERCIAL VEHICLE | Gamma Communications vs. GRIFFIN MINING LTD | Gamma Communications vs. Motorcar Parts of |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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