Correlation Between GMS and Metalink
Can any of the company-specific risk be diversified away by investing in both GMS and Metalink 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 Metalink into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GMS Inc and Metalink, you can compare the effects of market volatilities on GMS and Metalink 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 Metalink. Check out your portfolio center. Please also check ongoing floating volatility patterns of GMS and Metalink.
Diversification Opportunities for GMS and Metalink
Poor diversification
The 3 months correlation between GMS and Metalink is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding GMS Inc and Metalink in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metalink 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 Metalink. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metalink has no effect on the direction of GMS i.e., GMS and Metalink go up and down completely randomly.
Pair Corralation between GMS and Metalink
If you would invest 43.00 in Metalink on September 12, 2024 and sell it today you would earn a total of 0.00 from holding Metalink or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GMS Inc vs. Metalink
Performance |
| Timeline |
| GMS Inc |
| Metalink |
GMS and Metalink Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GMS and Metalink
The main advantage of trading using opposite GMS and Metalink positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GMS position performs unexpectedly, Metalink 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 Metalink will offset losses from the drop in Metalink'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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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