Correlation Between GP Investments and Illumina
Can any of the company-specific risk be diversified away by investing in both GP Investments and Illumina 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 Illumina into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GP Investments and Illumina, you can compare the effects of market volatilities on GP Investments and Illumina 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 Illumina. Check out your portfolio center. Please also check ongoing floating volatility patterns of GP Investments and Illumina.
Diversification Opportunities for GP Investments and Illumina
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between GPIV33 and Illumina is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding GP Investments and Illumina in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Illumina 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 Illumina. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Illumina has no effect on the direction of GP Investments i.e., GP Investments and Illumina go up and down completely randomly.
Pair Corralation between GP Investments and Illumina
Assuming the 90 days trading horizon GP Investments is expected to generate 1.29 times more return on investment than Illumina. However, GP Investments is 1.29 times more volatile than Illumina. It trades about 0.03 of its potential returns per unit of risk. Illumina is currently generating about 0.01 per unit of risk. If you would invest 339.00 in GP Investments on September 12, 2024 and sell it today you would earn a total of 42.00 from holding GP Investments or generate 12.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.43% |
| Values | Daily Returns |
GP Investments vs. Illumina
Performance |
| Timeline |
| GP Investments |
| Illumina |
GP Investments and Illumina Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GP Investments and Illumina
The main advantage of trading using opposite GP Investments and Illumina positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GP Investments position performs unexpectedly, Illumina 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 Illumina will offset losses from the drop in Illumina's long position.| GP Investments vs. The Bank of | GP Investments vs. Ameriprise Financial | GP Investments vs. Banco BTG Pactual | GP Investments vs. Banco BTG Pactual |
| Illumina vs. Zoom Video Communications | Illumina vs. GP Investments | Illumina vs. Take Two Interactive Software | Illumina vs. Monster Beverage |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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