Correlation Between Perma Pipe and Gibraltar Industries

Can any of the company-specific risk be diversified away by investing in both Perma Pipe and Gibraltar Industries 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 Perma Pipe and Gibraltar Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Perma Pipe International Holdings and Gibraltar Industries, you can compare the effects of market volatilities on Perma Pipe and Gibraltar Industries 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 Perma Pipe with a short position of Gibraltar Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Perma Pipe and Gibraltar Industries.

Diversification Opportunities for Perma Pipe and Gibraltar Industries

0.11

Correlation Coefficient

Perma Pipe  Gibraltar Industries

Average diversification

The 3 months correlation between Perma and Gibraltar is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Perma Pipe International Holdi and Gibraltar Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gibraltar Industries and Perma Pipe 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 Perma Pipe International Holdings are associated (or correlated) with Gibraltar Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gibraltar Industries has no effect on the direction of Perma Pipe i.e., Perma Pipe and Gibraltar Industries go up and down completely randomly.

Pair Corralation between Perma Pipe and Gibraltar Industries

Given the investment horizon of 90 days Perma Pipe International Holdings is expected to generate 1.19 times more return on investment than Gibraltar Industries. However, Perma Pipe is 1.19 times more volatile than Gibraltar Industries. It trades about 0.06 of its potential returns per unit of risk. Gibraltar Industries is currently generating about -0.01 per unit of risk. If you would invest  795.00  in Perma Pipe International Holdings on February 15, 2024 and sell it today you would earn a total of  111.00  from holding Perma Pipe International Holdings or generate 13.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Perma Pipe International Holdi  vs.  Gibraltar Industries

Perma Pipe Internati

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Perma Pipe International Holdings are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak forward indicators, Perma Pipe may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Gibraltar Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gibraltar Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's fundamental indicators remain quite persistent which may send shares a bit higher in June 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Perma Pipe and Gibraltar Industries

The main advantage of trading using opposite Perma Pipe and Gibraltar Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Perma Pipe position performs unexpectedly, Gibraltar Industries 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 Gibraltar Industries will offset losses from the drop in Gibraltar Industries' long position.

The idea behind Perma Pipe International Holdings and Gibraltar Industries pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Transaction History module to view history of all your transactions and understand their impact on performance.