Correlation Between Xponential Fitness and GMS
Can any of the company-specific risk be diversified away by investing in both Xponential Fitness 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 Xponential Fitness and GMS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xponential Fitness and GMS Inc, you can compare the effects of market volatilities on Xponential Fitness 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 Xponential Fitness with a short position of GMS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xponential Fitness and GMS.
Diversification Opportunities for Xponential Fitness and GMS
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Xponential and GMS is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Xponential Fitness and GMS Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GMS Inc and Xponential Fitness 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 Xponential Fitness 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 Xponential Fitness i.e., Xponential Fitness and GMS go up and down completely randomly.
Pair Corralation between Xponential Fitness and GMS
Given the investment horizon of 90 days Xponential Fitness is expected to generate 3.5 times more return on investment than GMS. However, Xponential Fitness is 3.5 times more volatile than GMS Inc. It trades about 0.15 of its potential returns per unit of risk. GMS Inc is currently generating about 0.2 per unit of risk. If you would invest 1,249 in Xponential Fitness on August 29, 2024 and sell it today you would earn a total of 257.00 from holding Xponential Fitness or generate 20.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xponential Fitness vs. GMS Inc
Performance |
| Timeline |
| Xponential Fitness |
| GMS Inc |
Xponential Fitness and GMS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xponential Fitness and GMS
The main advantage of trading using opposite Xponential Fitness and GMS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xponential Fitness 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.| Xponential Fitness vs. Bowlero Corp | Xponential Fitness vs. JAKKS Pacific | Xponential Fitness vs. Acushnet Holdings Corp | Xponential Fitness vs. OneSpaWorld Holdings |
| 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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