Correlation Between Gibraltar Industries and Cimpress

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

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

Diversification Opportunities for Gibraltar Industries and Cimpress

-0.03

Correlation Coefficient

Gibraltar Industries  Cimpress

Good diversification

The 3 months correlation between Gibraltar and Cimpress is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Gibraltar Industries and Cimpress NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cimpress NV and Gibraltar Industries 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 Gibraltar Industries are associated (or correlated) with Cimpress. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cimpress NV has no effect on the direction of Gibraltar Industries i.e., Gibraltar Industries and Cimpress go up and down completely randomly.

Pair Corralation between Gibraltar Industries and Cimpress

Given the investment horizon of 90 days Gibraltar Industries is expected to generate 0.7 times more return on investment than Cimpress. However, Gibraltar Industries is 1.42 times less risky than Cimpress. It trades about 0.1 of its potential returns per unit of risk. Cimpress NV is currently generating about 0.0 per unit of risk. If you would invest  6,408  in Gibraltar Industries on August 9, 2024 and sell it today you would earn a total of  817.00  from holding Gibraltar Industries or generate 12.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Gibraltar Industries  vs.  Cimpress NV

Gibraltar Industries

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gibraltar Industries are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite weak fundamental indicators, Gibraltar Industries disclosed solid returns over the last few months and may actually be approaching a breakup point.

Cimpress NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cimpress NV has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Cimpress is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Gibraltar Industries and Cimpress

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

The idea behind Gibraltar Industries and Cimpress NV 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.