Correlation Between GMS and Brand Engagement
Can any of the company-specific risk be diversified away by investing in both GMS and Brand Engagement 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 Brand Engagement into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GMS Inc and Brand Engagement Network, you can compare the effects of market volatilities on GMS and Brand Engagement 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 Brand Engagement. Check out your portfolio center. Please also check ongoing floating volatility patterns of GMS and Brand Engagement.
Diversification Opportunities for GMS and Brand Engagement
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between GMS and Brand is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding GMS Inc and Brand Engagement Network in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brand Engagement Network 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 Brand Engagement. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brand Engagement Network has no effect on the direction of GMS i.e., GMS and Brand Engagement go up and down completely randomly.
Pair Corralation between GMS and Brand Engagement
Considering the 90-day investment horizon GMS is expected to generate 3.8 times less return on investment than Brand Engagement. But when comparing it to its historical volatility, GMS Inc is 13.77 times less risky than Brand Engagement. It trades about 0.26 of its potential returns per unit of risk. Brand Engagement Network is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 2.04 in Brand Engagement Network on August 30, 2024 and sell it today you would lose (0.41) from holding Brand Engagement Network or give up 20.1% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 63.64% |
| Values | Daily Returns |
GMS Inc vs. Brand Engagement Network
Performance |
| Timeline |
| GMS Inc |
| Brand Engagement Network |
GMS and Brand Engagement Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GMS and Brand Engagement
The main advantage of trading using opposite GMS and Brand Engagement positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GMS position performs unexpectedly, Brand Engagement 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 Brand Engagement will offset losses from the drop in Brand Engagement's long position.| GMS vs. Quanex Building Products | GMS vs. Apogee Enterprises | GMS vs. Azek Company | GMS vs. Beacon Roofing Supply |
| Brand Engagement vs. Aegon NV ADR | Brand Engagement vs. Turning Point Brands | Brand Engagement vs. Japan Tobacco ADR | Brand Engagement vs. Keurig Dr Pepper |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
Other Complementary Tools
| CEOs Directory Screen CEOs from public companies around the world | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities |