Correlation Between GoHealth and GMS
Can any of the company-specific risk be diversified away by investing in both GoHealth and GMS 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 GoHealth and GMS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GoHealth and GMS Inc, you can compare the effects of market volatilities on GoHealth and GMS 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 GoHealth with a short position of GMS. Check out your portfolio center. Please also check ongoing floating volatility patterns of GoHealth and GMS.
Diversification Opportunities for GoHealth and GMS
Poor diversification
The 3 months correlation between GoHealth and GMS is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding GoHealth and GMS Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GMS Inc and GoHealth 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 GoHealth are associated (or correlated) with GMS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GMS Inc has no effect on the direction of GoHealth i.e., GoHealth and GMS go up and down completely randomly.
Pair Corralation between GoHealth and GMS
Given the investment horizon of 90 days GoHealth is expected to generate 2.45 times less return on investment than GMS. In addition to that, GoHealth is 2.47 times more volatile than GMS Inc. It trades about 0.02 of its total potential returns per unit of risk. GMS Inc is currently generating about 0.1 per unit of volatility. If you would invest 6,764 in GMS Inc on August 26, 2024 and sell it today you would earn a total of 3,406 from holding GMS Inc or generate 50.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GoHealth vs. GMS Inc
Performance |
| Timeline |
| GoHealth |
| GMS Inc |
GoHealth and GMS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GoHealth and GMS
The main advantage of trading using opposite GoHealth and GMS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GoHealth position performs unexpectedly, GMS 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 GMS will offset losses from the drop in GMS's long position.| GoHealth vs. eHealth | GoHealth vs. Tian Ruixiang Holdings | GoHealth vs. Huize Holding | GoHealth vs. Selectquote |
| GMS vs. Quanex Building Products | GMS vs. Apogee Enterprises | GMS vs. Azek Company | GMS vs. Beacon Roofing Supply |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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