Correlation Between Gorman Rupp and Generac Holdings
Can any of the company-specific risk be diversified away by investing in both Gorman Rupp and Generac Holdings 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 Gorman Rupp and Generac Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gorman Rupp and Generac Holdings, you can compare the effects of market volatilities on Gorman Rupp and Generac Holdings 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 Gorman Rupp with a short position of Generac Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gorman Rupp and Generac Holdings.
Diversification Opportunities for Gorman Rupp and Generac Holdings
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Gorman and Generac is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Gorman Rupp and Generac Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Generac Holdings and Gorman Rupp 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 Gorman Rupp are associated (or correlated) with Generac Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Generac Holdings has no effect on the direction of Gorman Rupp i.e., Gorman Rupp and Generac Holdings go up and down completely randomly.
Pair Corralation between Gorman Rupp and Generac Holdings
Considering the 90-day investment horizon Gorman Rupp is expected to generate 1.57 times less return on investment than Generac Holdings. But when comparing it to its historical volatility, Gorman Rupp is 1.55 times less risky than Generac Holdings. It trades about 0.06 of its potential returns per unit of risk. Generac Holdings is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 9,429 in Generac Holdings on August 27, 2024 and sell it today you would earn a total of 9,479 from holding Generac Holdings or generate 100.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gorman Rupp vs. Generac Holdings
Performance |
| Timeline |
| Gorman Rupp |
| Generac Holdings |
Gorman Rupp and Generac Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gorman Rupp and Generac Holdings
The main advantage of trading using opposite Gorman Rupp and Generac Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gorman Rupp position performs unexpectedly, Generac Holdings 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 Generac Holdings will offset losses from the drop in Generac Holdings' long position.| Gorman Rupp vs. Standex International | Gorman Rupp vs. Franklin Electric Co | Gorman Rupp vs. Omega Flex | Gorman Rupp vs. China Yuchai International |
| Generac Holdings vs. Emerson Electric | Generac Holdings vs. Eaton PLC | Generac Holdings vs. Parker Hannifin | Generac Holdings vs. Illinois Tool Works |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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