Correlation Between GMS and Global Ship
Can any of the company-specific risk be diversified away by investing in both GMS and Global Ship 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 Global Ship into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GMS Inc and Global Ship Lease, you can compare the effects of market volatilities on GMS and Global Ship 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 Global Ship. Check out your portfolio center. Please also check ongoing floating volatility patterns of GMS and Global Ship.
Diversification Opportunities for GMS and Global Ship
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between GMS and Global is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding GMS Inc and Global Ship Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Ship Lease 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 Global Ship. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Ship Lease has no effect on the direction of GMS i.e., GMS and Global Ship go up and down completely randomly.
Pair Corralation between GMS and Global Ship
Considering the 90-day investment horizon GMS Inc is expected to generate 1.89 times more return on investment than Global Ship. However, GMS is 1.89 times more volatile than Global Ship Lease. It trades about 0.08 of its potential returns per unit of risk. Global Ship Lease is currently generating about 0.05 per unit of risk. If you would invest 7,212 in GMS Inc on September 4, 2024 and sell it today you would earn a total of 2,801 from holding GMS Inc or generate 38.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GMS Inc vs. Global Ship Lease
Performance |
| Timeline |
| GMS Inc |
| Global Ship Lease |
GMS and Global Ship Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GMS and Global Ship
The main advantage of trading using opposite GMS and Global Ship positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GMS position performs unexpectedly, Global Ship 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 Global Ship will offset losses from the drop in Global Ship's long position.| GMS vs. Quanex Building Products | GMS vs. Apogee Enterprises | GMS vs. Azek Company | GMS vs. Beacon Roofing Supply |
| Global Ship vs. Safe Bulkers | Global Ship vs. Diana Shipping | Global Ship vs. Costamare | Global Ship vs. Safe Bulkers |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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