Correlation Between GMS and Hf Foods
Can any of the company-specific risk be diversified away by investing in both GMS and Hf Foods 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 Hf Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GMS Inc and Hf Foods Group, you can compare the effects of market volatilities on GMS and Hf Foods 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 Hf Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of GMS and Hf Foods.
Diversification Opportunities for GMS and Hf Foods
Very weak diversification
The 3 months correlation between GMS and HFFG is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding GMS Inc and Hf Foods Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hf Foods Group 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 Hf Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hf Foods Group has no effect on the direction of GMS i.e., GMS and Hf Foods go up and down completely randomly.
Pair Corralation between GMS and Hf Foods
Considering the 90-day investment horizon GMS Inc is expected to generate 0.98 times more return on investment than Hf Foods. However, GMS Inc is 1.02 times less risky than Hf Foods. It trades about 0.31 of its potential returns per unit of risk. Hf Foods Group is currently generating about 0.02 per unit of risk. If you would invest 9,203 in GMS Inc on August 27, 2024 and sell it today you would earn a total of 1,181 from holding GMS Inc or generate 12.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GMS Inc vs. Hf Foods Group
Performance |
| Timeline |
| GMS Inc |
| Hf Foods Group |
GMS and Hf Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GMS and Hf Foods
The main advantage of trading using opposite GMS and Hf Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GMS position performs unexpectedly, Hf Foods 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 Hf Foods will offset losses from the drop in Hf Foods' long position.| GMS vs. Quanex Building Products | GMS vs. Apogee Enterprises | GMS vs. Azek Company | GMS vs. Beacon Roofing Supply |
| Hf Foods vs. Innovative Food Hldg | Hf Foods vs. Calavo Growers | Hf Foods vs. The Chefs Warehouse | Hf Foods vs. AMCON Distributing |
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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