Correlation Between URBAN OUTFITTERS and Gamma Communications
Can any of the company-specific risk be diversified away by investing in both URBAN OUTFITTERS and Gamma Communications 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 URBAN OUTFITTERS and Gamma Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between URBAN OUTFITTERS and Gamma Communications plc, you can compare the effects of market volatilities on URBAN OUTFITTERS and Gamma Communications 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 URBAN OUTFITTERS with a short position of Gamma Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of URBAN OUTFITTERS and Gamma Communications.
Diversification Opportunities for URBAN OUTFITTERS and Gamma Communications
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between URBAN and Gamma is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding URBAN OUTFITTERS and Gamma Communications plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gamma Communications plc and URBAN OUTFITTERS 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 URBAN OUTFITTERS are associated (or correlated) with Gamma Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gamma Communications plc has no effect on the direction of URBAN OUTFITTERS i.e., URBAN OUTFITTERS and Gamma Communications go up and down completely randomly.
Pair Corralation between URBAN OUTFITTERS and Gamma Communications
Assuming the 90 days trading horizon URBAN OUTFITTERS is expected to generate 3.4 times more return on investment than Gamma Communications. However, URBAN OUTFITTERS is 3.4 times more volatile than Gamma Communications plc. It trades about 0.34 of its potential returns per unit of risk. Gamma Communications plc is currently generating about -0.12 per unit of risk. If you would invest 3,300 in URBAN OUTFITTERS on September 1, 2024 and sell it today you would earn a total of 1,180 from holding URBAN OUTFITTERS or generate 35.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
URBAN OUTFITTERS vs. Gamma Communications plc
Performance |
| Timeline |
| URBAN OUTFITTERS |
| Gamma Communications plc |
URBAN OUTFITTERS and Gamma Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with URBAN OUTFITTERS and Gamma Communications
The main advantage of trading using opposite URBAN OUTFITTERS and Gamma Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if URBAN OUTFITTERS position performs unexpectedly, Gamma Communications 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 Gamma Communications will offset losses from the drop in Gamma Communications' long position.| URBAN OUTFITTERS vs. PARKEN Sport Entertainment | URBAN OUTFITTERS vs. Air Transport Services | URBAN OUTFITTERS vs. INTERCONT HOTELS | URBAN OUTFITTERS vs. NTG Nordic Transport |
| Gamma Communications vs. Games Workshop Group | Gamma Communications vs. Penn National Gaming | Gamma Communications vs. Zijin Mining Group | Gamma Communications vs. QINGCI GAMES INC |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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