Correlation Between GMS and Air Transport
Can any of the company-specific risk be diversified away by investing in both GMS and Air Transport 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 GMS and Air Transport into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GMS Inc and Air Transport Services, you can compare the effects of market volatilities on GMS and Air Transport 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 GMS with a short position of Air Transport. Check out your portfolio center. Please also check ongoing floating volatility patterns of GMS and Air Transport.
Diversification Opportunities for GMS and Air Transport
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between GMS and Air is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding GMS Inc and Air Transport Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Transport Services and GMS 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 GMS Inc are associated (or correlated) with Air Transport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Transport Services has no effect on the direction of GMS i.e., GMS and Air Transport go up and down completely randomly.
Pair Corralation between GMS and Air Transport
Considering the 90-day investment horizon GMS Inc is expected to under-perform the Air Transport. In addition to that, GMS is 11.52 times more volatile than Air Transport Services. It trades about -0.05 of its total potential returns per unit of risk. Air Transport Services is currently generating about 0.46 per unit of volatility. If you would invest 2,190 in Air Transport Services on October 20, 2024 and sell it today you would earn a total of 21.00 from holding Air Transport Services or generate 0.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GMS Inc vs. Air Transport Services
Performance |
| Timeline |
| GMS Inc |
| Air Transport Services |
GMS and Air Transport Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GMS and Air Transport
The main advantage of trading using opposite GMS and Air Transport positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GMS position performs unexpectedly, Air Transport 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 Air Transport will offset losses from the drop in Air Transport's long position.| GMS vs. Quanex Building Products | GMS vs. Apogee Enterprises | GMS vs. Azek Company | GMS vs. Beacon Roofing Supply |
| Air Transport vs. Copa Holdings SA | Air Transport vs. SkyWest | Air Transport vs. Sun Country Airlines | Air Transport vs. Frontier Group Holdings |
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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