Correlation Between GMS and Q2 Holdings
Can any of the company-specific risk be diversified away by investing in both GMS and Q2 Holdings 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 Q2 Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GMS Inc and Q2 Holdings, you can compare the effects of market volatilities on GMS and Q2 Holdings 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 Q2 Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of GMS and Q2 Holdings.
Diversification Opportunities for GMS and Q2 Holdings
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between GMS and QTWO is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding GMS Inc and Q2 Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Q2 Holdings 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 Q2 Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Q2 Holdings has no effect on the direction of GMS i.e., GMS and Q2 Holdings go up and down completely randomly.
Pair Corralation between GMS and Q2 Holdings
Considering the 90-day investment horizon GMS is expected to generate 2.15 times less return on investment than Q2 Holdings. But when comparing it to its historical volatility, GMS Inc is 1.82 times less risky than Q2 Holdings. It trades about 0.25 of its potential returns per unit of risk. Q2 Holdings is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 8,509 in Q2 Holdings on September 2, 2024 and sell it today you would earn a total of 1,965 from holding Q2 Holdings or generate 23.09% 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. Q2 Holdings
Performance |
| Timeline |
| GMS Inc |
| Q2 Holdings |
GMS and Q2 Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GMS and Q2 Holdings
The main advantage of trading using opposite GMS and Q2 Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GMS position performs unexpectedly, Q2 Holdings 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 Q2 Holdings will offset losses from the drop in Q2 Holdings' long position.| GMS vs. Quanex Building Products | GMS vs. Apogee Enterprises | GMS vs. Azek Company | GMS vs. Beacon Roofing Supply |
| Q2 Holdings vs. PROS Holdings | Q2 Holdings vs. Meridianlink | Q2 Holdings vs. Enfusion | Q2 Holdings vs. Paylocity Holdng |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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