Correlation Between GP Investments and SP Global
Can any of the company-specific risk be diversified away by investing in both GP Investments and SP Global 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 SP Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GP Investments and SP Global, you can compare the effects of market volatilities on GP Investments and SP Global 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 SP Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of GP Investments and SP Global.
Diversification Opportunities for GP Investments and SP Global
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GPIV33 and SPGI34 is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding GP Investments and SP Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SP Global 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 SP Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SP Global has no effect on the direction of GP Investments i.e., GP Investments and SP Global go up and down completely randomly.
Pair Corralation between GP Investments and SP Global
Assuming the 90 days trading horizon GP Investments is expected to generate 2.03 times less return on investment than SP Global. In addition to that, GP Investments is 1.02 times more volatile than SP Global. It trades about 0.1 of its total potential returns per unit of risk. SP Global is currently generating about 0.21 per unit of volatility. If you would invest 7,783 in SP Global on September 5, 2024 and sell it today you would earn a total of 920.00 from holding SP Global or generate 11.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GP Investments vs. SP Global
Performance |
| Timeline |
| GP Investments |
| SP Global |
GP Investments and SP Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GP Investments and SP Global
The main advantage of trading using opposite GP Investments and SP Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GP Investments position performs unexpectedly, SP Global 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 SP Global will offset losses from the drop in SP Global's long position.| GP Investments vs. Bradespar SA | GP Investments vs. Hsi Malls Fundo | GP Investments vs. Fundo Investimento Imobiliario | GP Investments vs. Fras le SA |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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