Correlation Between GP Investments and Cable One
Can any of the company-specific risk be diversified away by investing in both GP Investments and Cable One 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 GP Investments and Cable One into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GP Investments and Cable One, you can compare the effects of market volatilities on GP Investments and Cable One 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 GP Investments with a short position of Cable One. Check out your portfolio center. Please also check ongoing floating volatility patterns of GP Investments and Cable One.
Diversification Opportunities for GP Investments and Cable One
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between GPIV33 and Cable is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding GP Investments and Cable One in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cable One and GP Investments 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 GP Investments are associated (or correlated) with Cable One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cable One has no effect on the direction of GP Investments i.e., GP Investments and Cable One go up and down completely randomly.
Pair Corralation between GP Investments and Cable One
Assuming the 90 days trading horizon GP Investments is expected to generate 0.95 times more return on investment than Cable One. However, GP Investments is 1.05 times less risky than Cable One. It trades about 0.05 of its potential returns per unit of risk. Cable One is currently generating about -0.06 per unit of risk. If you would invest 232.00 in GP Investments on November 7, 2024 and sell it today you would earn a total of 180.00 from holding GP Investments or generate 77.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 68.37% |
| Values | Daily Returns |
GP Investments vs. Cable One
Performance |
| Timeline |
| GP Investments |
| Cable One |
GP Investments and Cable One Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GP Investments and Cable One
The main advantage of trading using opposite GP Investments and Cable One positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GP Investments position performs unexpectedly, Cable One 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 Cable One will offset losses from the drop in Cable One's long position.| GP Investments vs. BlackRock | GP Investments vs. Brookfield | GP Investments vs. The Bank of | GP Investments vs. Ameriprise Financial |
| Cable One vs. Ross Stores | Cable One vs. Applied Materials, | Cable One vs. Liberty Broadband | Cable One vs. Universal Health Services, |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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