Correlation Between Hibbett Sports and Gap
Can any of the company-specific risk be diversified away by investing in both Hibbett Sports and Gap 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 Hibbett Sports and Gap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hibbett Sports and Gap Inc, you can compare the effects of market volatilities on Hibbett Sports and Gap 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 Hibbett Sports with a short position of Gap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hibbett Sports and Gap.
Diversification Opportunities for Hibbett Sports and Gap
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Hibbett and Gap is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Hibbett Sports and Gap Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gap Inc and Hibbett Sports 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 Hibbett Sports are associated (or correlated) with Gap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gap Inc has no effect on the direction of Hibbett Sports i.e., Hibbett Sports and Gap go up and down completely randomly.
Pair Corralation between Hibbett Sports and Gap
Given the investment horizon of 90 days Hibbett Sports is expected to generate 2.52 times less return on investment than Gap. But when comparing it to its historical volatility, Hibbett Sports is 1.26 times less risky than Gap. It trades about 0.03 of its potential returns per unit of risk. Gap Inc is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,103 in Gap Inc on August 28, 2024 and sell it today you would earn a total of 1,225 from holding Gap Inc or generate 111.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 94.19% |
| Values | Daily Returns |
Hibbett Sports vs. Gap Inc
Performance |
| Timeline |
| Hibbett Sports |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Gap Inc |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Hibbett Sports and Gap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hibbett Sports and Gap
The main advantage of trading using opposite Hibbett Sports and Gap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hibbett Sports position performs unexpectedly, Gap 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 Gap will offset losses from the drop in Gap's long position.| Hibbett Sports vs. Big 5 Sporting | Hibbett Sports vs. Genesco | Hibbett Sports vs. Shoe Carnival | Hibbett Sports vs. MarineMax |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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