Correlation Between Gulf Island and SG Blocks
Can any of the company-specific risk be diversified away by investing in both Gulf Island and SG Blocks 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 SG Blocks 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 SG Blocks, you can compare the effects of market volatilities on Gulf Island and SG Blocks 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 SG Blocks. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gulf Island and SG Blocks.
Diversification Opportunities for Gulf Island and SG Blocks
-0.86 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Gulf and SGBX is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding Gulf Island Fabrication and SG Blocks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SG Blocks 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 SG Blocks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SG Blocks has no effect on the direction of Gulf Island i.e., Gulf Island and SG Blocks go up and down completely randomly.
Pair Corralation between Gulf Island and SG Blocks
Given the investment horizon of 90 days Gulf Island Fabrication is expected to generate 0.28 times more return on investment than SG Blocks. However, Gulf Island Fabrication is 3.57 times less risky than SG Blocks. It trades about 0.07 of its potential returns per unit of risk. SG Blocks is currently generating about -0.02 per unit of risk. If you would invest 451.00 in Gulf Island Fabrication on October 20, 2024 and sell it today you would earn a total of 252.00 from holding Gulf Island Fabrication or generate 55.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gulf Island Fabrication vs. SG Blocks
Performance |
| Timeline |
| Gulf Island Fabrication |
| SG Blocks |
Gulf Island and SG Blocks Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gulf Island and SG Blocks
The main advantage of trading using opposite Gulf Island and SG Blocks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gulf Island position performs unexpectedly, SG Blocks 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 SG Blocks will offset losses from the drop in SG Blocks' long position.| Gulf Island vs. Insteel Industries | Gulf Island vs. Mayville Engineering Co | Gulf Island vs. ESAB Corp | Gulf Island vs. Northwest Pipe |
| SG Blocks vs. Insteel Industries | SG Blocks vs. Carpenter Technology | SG Blocks vs. Mueller Industries | SG Blocks vs. Northwest Pipe |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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