Correlation Between GMS and BW Offshore
Can any of the company-specific risk be diversified away by investing in both GMS and BW Offshore 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 BW Offshore into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GMS Inc and BW Offshore Limited, you can compare the effects of market volatilities on GMS and BW Offshore 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 BW Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of GMS and BW Offshore.
Diversification Opportunities for GMS and BW Offshore
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between GMS and BWOFY is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding GMS Inc and BW Offshore Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BW Offshore Limited 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 BW Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BW Offshore Limited has no effect on the direction of GMS i.e., GMS and BW Offshore go up and down completely randomly.
Pair Corralation between GMS and BW Offshore
Considering the 90-day investment horizon GMS Inc is expected to generate 1.38 times more return on investment than BW Offshore. However, GMS is 1.38 times more volatile than BW Offshore Limited. It trades about 0.05 of its potential returns per unit of risk. BW Offshore Limited is currently generating about 0.07 per unit of risk. If you would invest 7,211 in GMS Inc on September 12, 2024 and sell it today you would earn a total of 2,289 from holding GMS Inc or generate 31.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.72% |
| Values | Daily Returns |
GMS Inc vs. BW Offshore Limited
Performance |
| Timeline |
| GMS Inc |
| BW Offshore Limited |
GMS and BW Offshore Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GMS and BW Offshore
The main advantage of trading using opposite GMS and BW Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GMS position performs unexpectedly, BW Offshore 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 BW Offshore will offset losses from the drop in BW Offshore's long position.| GMS vs. Quanex Building Products | GMS vs. Apogee Enterprises | GMS vs. Azek Company | GMS vs. Beacon Roofing Supply |
| BW Offshore vs. Legacy Education | BW Offshore vs. Apple Inc | BW Offshore vs. NVIDIA | BW Offshore vs. Microsoft |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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