Correlation Between Cedar Realty and GMS
Can any of the company-specific risk be diversified away by investing in both Cedar Realty 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 Cedar Realty and GMS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cedar Realty Trust and GMS Inc, you can compare the effects of market volatilities on Cedar Realty 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 Cedar Realty with a short position of GMS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cedar Realty and GMS.
Diversification Opportunities for Cedar Realty and GMS
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cedar and GMS is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Cedar Realty Trust and GMS Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GMS Inc and Cedar Realty 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 Cedar Realty Trust 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 Cedar Realty i.e., Cedar Realty and GMS go up and down completely randomly.
Pair Corralation between Cedar Realty and GMS
Assuming the 90 days trading horizon Cedar Realty is expected to generate 1.18 times less return on investment than GMS. In addition to that, Cedar Realty is 1.5 times more volatile than GMS Inc. It trades about 0.04 of its total potential returns per unit of risk. GMS Inc is currently generating about 0.08 per unit of volatility. If you would invest 5,375 in GMS Inc on August 30, 2024 and sell it today you would earn a total of 4,647 from holding GMS Inc or generate 86.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cedar Realty Trust vs. GMS Inc
Performance |
| Timeline |
| Cedar Realty Trust |
| GMS Inc |
Cedar Realty and GMS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cedar Realty and GMS
The main advantage of trading using opposite Cedar Realty and GMS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cedar Realty 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.| Cedar Realty vs. Saul Centers | Cedar Realty vs. Kimco Realty | Cedar Realty vs. Wheeler Real Estate | Cedar Realty vs. Macerich Company |
| 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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