Correlation Between GMS and Infosys
Can any of the company-specific risk be diversified away by investing in both GMS and Infosys 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 Infosys into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GMS Inc and Infosys Ltd ADR, you can compare the effects of market volatilities on GMS and Infosys 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 Infosys. Check out your portfolio center. Please also check ongoing floating volatility patterns of GMS and Infosys.
Diversification Opportunities for GMS and Infosys
Very good diversification
The 3 months correlation between GMS and Infosys is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding GMS Inc and Infosys Ltd ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Infosys Ltd ADR 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 Infosys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Infosys Ltd ADR has no effect on the direction of GMS i.e., GMS and Infosys go up and down completely randomly.
Pair Corralation between GMS and Infosys
Considering the 90-day investment horizon GMS Inc is expected to generate 1.27 times more return on investment than Infosys. However, GMS is 1.27 times more volatile than Infosys Ltd ADR. It trades about 0.09 of its potential returns per unit of risk. Infosys Ltd ADR is currently generating about 0.08 per unit of risk. If you would invest 6,988 in GMS Inc on September 2, 2024 and sell it today you would earn a total of 3,047 from holding GMS Inc or generate 43.6% 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. Infosys Ltd ADR
Performance |
| Timeline |
| GMS Inc |
| Infosys Ltd ADR |
GMS and Infosys Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GMS and Infosys
The main advantage of trading using opposite GMS and Infosys positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GMS position performs unexpectedly, Infosys 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 Infosys will offset losses from the drop in Infosys' long position.| GMS vs. Quanex Building Products | GMS vs. Apogee Enterprises | GMS vs. Azek Company | GMS vs. Beacon Roofing Supply |
| Infosys vs. FiscalNote Holdings | Infosys vs. Innodata | Infosys vs. Aurora Innovation | Infosys vs. Conduent |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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