Correlation Between Gibraltar Industries and Masco
Can any of the company-specific risk be diversified away by investing in both Gibraltar Industries and Masco 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 Gibraltar Industries and Masco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gibraltar Industries and Masco, you can compare the effects of market volatilities on Gibraltar Industries and Masco 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 Gibraltar Industries with a short position of Masco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gibraltar Industries and Masco.
Diversification Opportunities for Gibraltar Industries and Masco
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Gibraltar and Masco is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Gibraltar Industries and Masco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Masco and Gibraltar Industries 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 Gibraltar Industries are associated (or correlated) with Masco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Masco has no effect on the direction of Gibraltar Industries i.e., Gibraltar Industries and Masco go up and down completely randomly.
Pair Corralation between Gibraltar Industries and Masco
Given the investment horizon of 90 days Gibraltar Industries is expected to generate 1.67 times more return on investment than Masco. However, Gibraltar Industries is 1.67 times more volatile than Masco. It trades about 0.17 of its potential returns per unit of risk. Masco is currently generating about -0.16 per unit of risk. If you would invest 6,509 in Gibraltar Industries on August 24, 2024 and sell it today you would earn a total of 463.00 from holding Gibraltar Industries or generate 7.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gibraltar Industries vs. Masco
Performance |
| Timeline |
| Gibraltar Industries |
| Masco |
Gibraltar Industries and Masco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gibraltar Industries and Masco
The main advantage of trading using opposite Gibraltar Industries and Masco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gibraltar Industries position performs unexpectedly, Masco 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 Masco will offset losses from the drop in Masco's long position.| Gibraltar Industries vs. Quanex Building Products | Gibraltar Industries vs. Jeld Wen Holding | Gibraltar Industries vs. Perma Pipe International Holdings | Gibraltar Industries vs. Interface |
| Masco vs. Trane Technologies plc | Masco vs. Quanex Building Products | Masco vs. Jeld Wen Holding | Masco vs. Azek Company |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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