Correlation Between Aspen Aerogels and GMS
Can any of the company-specific risk be diversified away by investing in both Aspen Aerogels 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 Aspen Aerogels and GMS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aspen Aerogels and GMS Inc, you can compare the effects of market volatilities on Aspen Aerogels 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 Aspen Aerogels with a short position of GMS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aspen Aerogels and GMS.
Diversification Opportunities for Aspen Aerogels and GMS
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Aspen and GMS is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Aspen Aerogels and GMS Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GMS Inc and Aspen Aerogels 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 Aspen Aerogels 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 Aspen Aerogels i.e., Aspen Aerogels and GMS go up and down completely randomly.
Pair Corralation between Aspen Aerogels and GMS
Given the investment horizon of 90 days Aspen Aerogels is expected to under-perform the GMS. In addition to that, Aspen Aerogels is 1.86 times more volatile than GMS Inc. It trades about -0.27 of its total potential returns per unit of risk. GMS Inc is currently generating about 0.26 per unit of volatility. If you would invest 8,995 in GMS Inc on August 30, 2024 and sell it today you would earn a total of 1,027 from holding GMS Inc or generate 11.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aspen Aerogels vs. GMS Inc
Performance |
| Timeline |
| Aspen Aerogels |
| GMS Inc |
Aspen Aerogels and GMS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aspen Aerogels and GMS
The main advantage of trading using opposite Aspen Aerogels and GMS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aspen Aerogels 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.| Aspen Aerogels vs. Apyx Medical | Aspen Aerogels vs. Century Communities | Aspen Aerogels vs. Ardmore Shpng | Aspen Aerogels vs. American Assets Trust |
| GMS vs. Quanex Building Products | GMS vs. Apogee Enterprises | GMS vs. Azek Company | GMS vs. Beacon Roofing Supply |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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