Correlation Between GMS and Vestis
Can any of the company-specific risk be diversified away by investing in both GMS and Vestis 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 Vestis into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GMS Inc and Vestis, you can compare the effects of market volatilities on GMS and Vestis 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 Vestis. Check out your portfolio center. Please also check ongoing floating volatility patterns of GMS and Vestis.
Diversification Opportunities for GMS and Vestis
Average diversification
The 3 months correlation between GMS and Vestis is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding GMS Inc and Vestis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vestis 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 Vestis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vestis has no effect on the direction of GMS i.e., GMS and Vestis go up and down completely randomly.
Pair Corralation between GMS and Vestis
Considering the 90-day investment horizon GMS is expected to generate 2.21 times less return on investment than Vestis. But when comparing it to its historical volatility, GMS Inc is 2.15 times less risky than Vestis. It trades about 0.24 of its potential returns per unit of risk. Vestis is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 1,325 in Vestis on September 3, 2024 and sell it today you would earn a total of 283.00 from holding Vestis or generate 21.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GMS Inc vs. Vestis
Performance |
| Timeline |
| GMS Inc |
| Vestis |
GMS and Vestis Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GMS and Vestis
The main advantage of trading using opposite GMS and Vestis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GMS position performs unexpectedly, Vestis 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 Vestis will offset losses from the drop in Vestis' long position.| GMS vs. Quanex Building Products | GMS vs. Apogee Enterprises | GMS vs. Azek Company | GMS vs. Beacon Roofing Supply |
| Vestis vs. Celsius Holdings | Vestis vs. Eldorado Gold Corp | Vestis vs. Cementos Pacasmayo SAA | Vestis vs. IPG Photonics |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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