Correlation Between Belden and Gaia
Can any of the company-specific risk be diversified away by investing in both Belden and Gaia 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 Belden and Gaia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Belden Inc and Gaia Inc, you can compare the effects of market volatilities on Belden and Gaia 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 Belden with a short position of Gaia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Belden and Gaia.
Diversification Opportunities for Belden and Gaia
Poor diversification
The 3 months correlation between Belden and Gaia is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Belden Inc and Gaia Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gaia Inc and Belden 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 Belden Inc are associated (or correlated) with Gaia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gaia Inc has no effect on the direction of Belden i.e., Belden and Gaia go up and down completely randomly.
Pair Corralation between Belden and Gaia
Considering the 90-day investment horizon Belden is expected to generate 4.82 times less return on investment than Gaia. In addition to that, Belden is 1.0 times more volatile than Gaia Inc. It trades about 0.05 of its total potential returns per unit of risk. Gaia Inc is currently generating about 0.25 per unit of volatility. If you would invest 526.00 in Gaia Inc on August 30, 2024 and sell it today you would earn a total of 83.00 from holding Gaia Inc or generate 15.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Belden Inc vs. Gaia Inc
Performance |
| Timeline |
| Belden Inc |
| Gaia Inc |
Belden and Gaia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Belden and Gaia
The main advantage of trading using opposite Belden and Gaia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Belden position performs unexpectedly, Gaia 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 Gaia will offset losses from the drop in Gaia's long position.| Belden vs. Clearfield | Belden vs. Comtech Telecommunications Corp | Belden vs. Knowles Cor | Belden vs. Extreme Networks |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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