Correlation Between Quanex Building and GMS
Can any of the company-specific risk be diversified away by investing in both Quanex Building and GMS 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 Quanex Building and GMS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Quanex Building Products and GMS Inc, you can compare the effects of market volatilities on Quanex Building and GMS 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 Quanex Building with a short position of GMS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Quanex Building and GMS.
Diversification Opportunities for Quanex Building and GMS
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Quanex and GMS is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Quanex Building Products and GMS Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GMS Inc and Quanex Building 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 Quanex Building Products are associated (or correlated) with GMS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GMS Inc has no effect on the direction of Quanex Building i.e., Quanex Building and GMS go up and down completely randomly.
Pair Corralation between Quanex Building and GMS
Allowing for the 90-day total investment horizon Quanex Building Products is expected to under-perform the GMS. In addition to that, Quanex Building is 1.52 times more volatile than GMS Inc. It trades about -0.18 of its total potential returns per unit of risk. GMS Inc is currently generating about 0.09 per unit of volatility. If you would invest 8,430 in GMS Inc on November 2, 2024 and sell it today you would earn a total of 183.00 from holding GMS Inc or generate 2.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Quanex Building Products vs. GMS Inc
Performance |
| Timeline |
| Quanex Building Products |
| GMS Inc |
Quanex Building and GMS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Quanex Building and GMS
The main advantage of trading using opposite Quanex Building and GMS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Quanex Building position performs unexpectedly, GMS 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 GMS will offset losses from the drop in GMS's long position.| Quanex Building vs. Gibraltar Industries | Quanex Building vs. Carpenter Technology | Quanex Building vs. Myers Industries | Quanex Building vs. Griffon |
| GMS vs. Quanex Building Products | GMS vs. Apogee Enterprises | GMS vs. Azek Company | GMS vs. Beacon Roofing Supply |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
Other Complementary Tools
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk |