Correlation Between GDI Integrated and Information Services
Can any of the company-specific risk be diversified away by investing in both GDI Integrated and Information Services 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 GDI Integrated and Information Services into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GDI Integrated and Information Services, you can compare the effects of market volatilities on GDI Integrated and Information Services 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 GDI Integrated with a short position of Information Services. Check out your portfolio center. Please also check ongoing floating volatility patterns of GDI Integrated and Information Services.
Diversification Opportunities for GDI Integrated and Information Services
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GDI and Information is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding GDI Integrated and Information Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Information Services and GDI Integrated 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 GDI Integrated are associated (or correlated) with Information Services. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Information Services has no effect on the direction of GDI Integrated i.e., GDI Integrated and Information Services go up and down completely randomly.
Pair Corralation between GDI Integrated and Information Services
Assuming the 90 days trading horizon GDI Integrated is expected to under-perform the Information Services. In addition to that, GDI Integrated is 1.55 times more volatile than Information Services. It trades about -0.04 of its total potential returns per unit of risk. Information Services is currently generating about 0.01 per unit of volatility. If you would invest 2,749 in Information Services on September 14, 2024 and sell it today you would earn a total of 1.00 from holding Information Services or generate 0.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GDI Integrated vs. Information Services
Performance |
| Timeline |
| GDI Integrated |
| Information Services |
GDI Integrated and Information Services Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GDI Integrated and Information Services
The main advantage of trading using opposite GDI Integrated and Information Services positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GDI Integrated position performs unexpectedly, Information Services 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 Information Services will offset losses from the drop in Information Services' long position.The idea behind GDI Integrated and Information Services 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.| Information Services vs. Ritchie Bros Auctioneers | Information Services vs. Transcontinental | Information Services vs. GDI Integrated | Information Services vs. Calian Technologies |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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