Correlation Between Gulf Island and Proto Labs
Can any of the company-specific risk be diversified away by investing in both Gulf Island and Proto Labs 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 Gulf Island and Proto Labs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gulf Island Fabrication and Proto Labs, you can compare the effects of market volatilities on Gulf Island and Proto Labs 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 Gulf Island with a short position of Proto Labs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gulf Island and Proto Labs.
Diversification Opportunities for Gulf Island and Proto Labs
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Gulf and Proto is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Gulf Island Fabrication and Proto Labs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Proto Labs and Gulf Island 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 Gulf Island Fabrication are associated (or correlated) with Proto Labs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Proto Labs has no effect on the direction of Gulf Island i.e., Gulf Island and Proto Labs go up and down completely randomly.
Pair Corralation between Gulf Island and Proto Labs
Given the investment horizon of 90 days Gulf Island Fabrication is expected to generate 0.92 times more return on investment than Proto Labs. However, Gulf Island Fabrication is 1.08 times less risky than Proto Labs. It trades about 0.04 of its potential returns per unit of risk. Proto Labs is currently generating about 0.03 per unit of risk. If you would invest 486.00 in Gulf Island Fabrication on October 20, 2024 and sell it today you would earn a total of 217.00 from holding Gulf Island Fabrication or generate 44.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gulf Island Fabrication vs. Proto Labs
Performance |
| Timeline |
| Gulf Island Fabrication |
| Proto Labs |
Gulf Island and Proto Labs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gulf Island and Proto Labs
The main advantage of trading using opposite Gulf Island and Proto Labs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gulf Island position performs unexpectedly, Proto Labs 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 Proto Labs will offset losses from the drop in Proto Labs' long position.| Gulf Island vs. Insteel Industries | Gulf Island vs. Mayville Engineering Co | Gulf Island vs. ESAB Corp | Gulf Island vs. Northwest Pipe |
| Proto Labs vs. Northwest Pipe | Proto Labs vs. Tredegar | Proto Labs vs. Insteel Industries | Proto Labs vs. Ryerson Holding Corp |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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