Correlation Between GMS and Minerals Technologies
Can any of the company-specific risk be diversified away by investing in both GMS and Minerals Technologies 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 Minerals Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GMS Inc and Minerals Technologies, you can compare the effects of market volatilities on GMS and Minerals Technologies 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 Minerals Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of GMS and Minerals Technologies.
Diversification Opportunities for GMS and Minerals Technologies
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between GMS and Minerals is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding GMS Inc and Minerals Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Minerals Technologies 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 Minerals Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Minerals Technologies has no effect on the direction of GMS i.e., GMS and Minerals Technologies go up and down completely randomly.
Pair Corralation between GMS and Minerals Technologies
Considering the 90-day investment horizon GMS Inc is expected to generate 1.13 times more return on investment than Minerals Technologies. However, GMS is 1.13 times more volatile than Minerals Technologies. It trades about 0.03 of its potential returns per unit of risk. Minerals Technologies is currently generating about -0.02 per unit of risk. If you would invest 9,396 in GMS Inc on August 29, 2024 and sell it today you would earn a total of 626.00 from holding GMS Inc or generate 6.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
GMS Inc vs. Minerals Technologies
Performance |
| Timeline |
| GMS Inc |
| Minerals Technologies |
GMS and Minerals Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GMS and Minerals Technologies
The main advantage of trading using opposite GMS and Minerals Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GMS position performs unexpectedly, Minerals Technologies 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 Minerals Technologies will offset losses from the drop in Minerals Technologies' 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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