Correlation Between Gulf Island and Invesco SP

Can any of the company-specific risk be diversified away by investing in both Gulf Island and Invesco SP 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 Gulf Island and Invesco SP into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Gulf Island Fabrication and Invesco SP 500, you can compare the effects of market volatilities on Gulf Island and Invesco SP 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 Gulf Island with a short position of Invesco SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gulf Island and Invesco SP.

Diversification Opportunities for Gulf Island and Invesco SP

-0.2

Correlation Coefficient

Gulf Island  Invesco SP

Good diversification

The 3 months correlation between Gulf and Invesco is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Gulf Island Fabrication and Invesco SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco SP 500 and Gulf Island 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 Gulf Island Fabrication are associated (or correlated) with Invesco SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco SP 500 has no effect on the direction of Gulf Island i.e., Gulf Island and Invesco SP go up and down completely randomly.

Pair Corralation between Gulf Island and Invesco SP

Given the investment horizon of 90 days Gulf Island Fabrication is expected to generate 2.67 times more return on investment than Invesco SP. However, Gulf Island is 2.67 times more volatile than Invesco SP 500. It trades about 0.16 of its potential returns per unit of risk. Invesco SP 500 is currently generating about 0.18 per unit of risk. If you would invest  531.00  in Gulf Island Fabrication on July 20, 2024 and sell it today you would earn a total of  49.00  from holding Gulf Island Fabrication or generate 9.23% return on investment over 90 days.

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

Gulf Island Fabrication  vs.  Invesco SP 500

Gulf Island Fabrication

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gulf Island Fabrication has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's technical and fundamental indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Invesco SP 500

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco SP 500 are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Invesco SP is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Gulf Island and Invesco SP

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

The idea behind Gulf Island Fabrication and Invesco SP 500 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.

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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..