Correlation Between GMS and Edgewell Personal
Can any of the company-specific risk be diversified away by investing in both GMS and Edgewell Personal 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 Edgewell Personal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GMS Inc and Edgewell Personal Care, you can compare the effects of market volatilities on GMS and Edgewell Personal 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 Edgewell Personal. Check out your portfolio center. Please also check ongoing floating volatility patterns of GMS and Edgewell Personal.
Diversification Opportunities for GMS and Edgewell Personal
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GMS and Edgewell is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding GMS Inc and Edgewell Personal Care in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Edgewell Personal Care 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 Edgewell Personal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Edgewell Personal Care has no effect on the direction of GMS i.e., GMS and Edgewell Personal go up and down completely randomly.
Pair Corralation between GMS and Edgewell Personal
Considering the 90-day investment horizon GMS Inc is expected to generate 1.23 times more return on investment than Edgewell Personal. However, GMS is 1.23 times more volatile than Edgewell Personal Care. It trades about 0.07 of its potential returns per unit of risk. Edgewell Personal Care is currently generating about 0.0 per unit of risk. If you would invest 5,535 in GMS Inc on September 2, 2024 and sell it today you would earn a total of 4,500 from holding GMS Inc or generate 81.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GMS Inc vs. Edgewell Personal Care
Performance |
| Timeline |
| GMS Inc |
| Edgewell Personal Care |
GMS and Edgewell Personal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GMS and Edgewell Personal
The main advantage of trading using opposite GMS and Edgewell Personal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GMS position performs unexpectedly, Edgewell Personal 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 Edgewell Personal will offset losses from the drop in Edgewell Personal's long position.| GMS vs. Quanex Building Products | GMS vs. Apogee Enterprises | GMS vs. Azek Company | GMS vs. Beacon Roofing Supply |
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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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