Correlation Between Flexible Solutions and GMS
Can any of the company-specific risk be diversified away by investing in both Flexible Solutions 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 Flexible Solutions and GMS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Flexible Solutions International and GMS Inc, you can compare the effects of market volatilities on Flexible Solutions 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 Flexible Solutions with a short position of GMS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flexible Solutions and GMS.
Diversification Opportunities for Flexible Solutions and GMS
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Flexible and GMS is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Flexible Solutions Internation and GMS Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GMS Inc and Flexible Solutions 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 Flexible Solutions International 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 Flexible Solutions i.e., Flexible Solutions and GMS go up and down completely randomly.
Pair Corralation between Flexible Solutions and GMS
Considering the 90-day investment horizon Flexible Solutions is expected to generate 1.36 times less return on investment than GMS. In addition to that, Flexible Solutions is 1.75 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 0.09 per unit of volatility. If you would invest 4,788 in GMS Inc on August 27, 2024 and sell it today you would earn a total of 5,382 from holding GMS Inc or generate 112.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Flexible Solutions Internation vs. GMS Inc
Performance |
| Timeline |
| Flexible Solutions |
| GMS Inc |
Flexible Solutions and GMS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Flexible Solutions and GMS
The main advantage of trading using opposite Flexible Solutions and GMS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flexible Solutions 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.| Flexible Solutions vs. Minerals Technologies | Flexible Solutions vs. Oil Dri | Flexible Solutions vs. H B Fuller | Flexible Solutions vs. Northern Technologies |
| 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
Other Complementary Tools
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites |