Correlation Between Retail Estates and Gap
Can any of the company-specific risk be diversified away by investing in both Retail Estates 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 Retail Estates and Gap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Retail Estates NV and The Gap, you can compare the effects of market volatilities on Retail Estates 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 Retail Estates with a short position of Gap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Retail Estates and Gap.
Diversification Opportunities for Retail Estates and Gap
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Retail and Gap is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Retail Estates NV and The Gap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gap and Retail Estates 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 Retail Estates NV 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 has no effect on the direction of Retail Estates i.e., Retail Estates and Gap go up and down completely randomly.
Pair Corralation between Retail Estates and Gap
Assuming the 90 days horizon Retail Estates NV is expected to under-perform the Gap. But the stock apears to be less risky and, when comparing its historical volatility, Retail Estates NV is 3.39 times less risky than Gap. The stock trades about -0.08 of its potential returns per unit of risk. The The Gap is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 2,308 in The Gap on September 13, 2024 and sell it today you would earn a total of 67.00 from holding The Gap or generate 2.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Retail Estates NV vs. The Gap
Performance |
| Timeline |
| Retail Estates NV |
| Gap |
Retail Estates and Gap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Retail Estates and Gap
The main advantage of trading using opposite Retail Estates and Gap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Retail Estates 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.| Retail Estates vs. Vicinity Centres | Retail Estates vs. Superior Plus Corp | Retail Estates vs. NMI Holdings | Retail Estates vs. SIVERS SEMICONDUCTORS AB |
| Gap vs. The TJX Companies | Gap vs. Superior Plus Corp | Gap vs. SIVERS SEMICONDUCTORS AB | Gap vs. NorAm Drilling AS |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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