Correlation Between GMS and CDT Environmental
Can any of the company-specific risk be diversified away by investing in both GMS and CDT Environmental 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 CDT Environmental into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GMS Inc and CDT Environmental Technology, you can compare the effects of market volatilities on GMS and CDT Environmental 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 CDT Environmental. Check out your portfolio center. Please also check ongoing floating volatility patterns of GMS and CDT Environmental.
Diversification Opportunities for GMS and CDT Environmental
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between GMS and CDT is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding GMS Inc and CDT Environmental Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CDT Environmental 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 CDT Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CDT Environmental has no effect on the direction of GMS i.e., GMS and CDT Environmental go up and down completely randomly.
Pair Corralation between GMS and CDT Environmental
Considering the 90-day investment horizon GMS is expected to generate 1.89 times less return on investment than CDT Environmental. But when comparing it to its historical volatility, GMS Inc is 6.14 times less risky than CDT Environmental. It trades about 0.25 of its potential returns per unit of risk. CDT Environmental Technology is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 298.00 in CDT Environmental Technology on September 2, 2024 and sell it today you would earn a total of 17.00 from holding CDT Environmental Technology or generate 5.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GMS Inc vs. CDT Environmental Technology
Performance |
| Timeline |
| GMS Inc |
| CDT Environmental |
GMS and CDT Environmental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GMS and CDT Environmental
The main advantage of trading using opposite GMS and CDT Environmental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GMS position performs unexpectedly, CDT Environmental 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 CDT Environmental will offset losses from the drop in CDT Environmental's long position.| GMS vs. Quanex Building Products | GMS vs. Apogee Enterprises | GMS vs. Azek Company | GMS vs. Beacon Roofing Supply |
| CDT Environmental vs. Olympic Steel | CDT Environmental vs. CDW Corp | CDT Environmental vs. GAMCO Global Gold | CDT Environmental vs. GMS Inc |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
Other Complementary Tools
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account |