Correlation Between Gap, and United States
Can any of the company-specific risk be diversified away by investing in both Gap, and United States 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 Gap, and United States into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Gap, and United States Steel, you can compare the effects of market volatilities on Gap, and United States 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 Gap, with a short position of United States. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gap, and United States.
Diversification Opportunities for Gap, and United States
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Gap, and United is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding The Gap, and United States Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United States Steel and Gap, 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 The Gap, are associated (or correlated) with United States. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United States Steel has no effect on the direction of Gap, i.e., Gap, and United States go up and down completely randomly.
Pair Corralation between Gap, and United States
Considering the 90-day investment horizon The Gap, is expected to generate 1.11 times more return on investment than United States. However, Gap, is 1.11 times more volatile than United States Steel. It trades about 0.07 of its potential returns per unit of risk. United States Steel is currently generating about 0.03 per unit of risk. If you would invest 1,079 in The Gap, on September 12, 2024 and sell it today you would earn a total of 1,455 from holding The Gap, or generate 134.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Gap, vs. United States Steel
Performance |
| Timeline |
| Gap, |
| United States Steel |
Gap, and United States Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gap, and United States
The main advantage of trading using opposite Gap, and United States positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gap, position performs unexpectedly, United States 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 United States will offset losses from the drop in United States' long position.The idea behind The Gap, and United States Steel pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| United States vs. Nucor Corp | United States vs. Steel Dynamics | United States vs. ArcelorMittal SA ADR | United States vs. Gerdau SA ADR |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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