Correlation Between Barnes Noble and GMS

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

By analyzing existing cross correlation between Barnes Noble and GMS Inc, you can compare the effects of market volatilities on Barnes Noble 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 Barnes Noble with a short position of GMS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barnes Noble and GMS.

Diversification Opportunities for Barnes Noble and GMS

0.0

Correlation Coefficient

Barnes Noble  GMS

Pay attention - limited upside

The 3 months correlation between Barnes and GMS is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Barnes Noble and GMS Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GMS Inc and Barnes Noble 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 Barnes Noble 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 Barnes Noble i.e., Barnes Noble and GMS go up and down completely randomly.

Pair Corralation between Barnes Noble and GMS

If you would invest (100.00) in Barnes Noble on February 7, 2024 and sell it today you would earn a total of  100.00  from holding Barnes Noble or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Barnes Noble  vs.  GMS Inc

Barnes Noble

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Barnes Noble has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable forward-looking signals, Barnes Noble is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

GMS Inc

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GMS Inc are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak primary indicators, GMS may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Barnes Noble and GMS

The main advantage of trading using opposite Barnes Noble and GMS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barnes Noble 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.

The idea behind Barnes Noble and GMS Inc 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.