Correlation Between Gibraltar Industries and ARC Document

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

By analyzing existing cross correlation between Gibraltar Industries and ARC Document Solutions, you can compare the effects of market volatilities on Gibraltar Industries and ARC Document 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 ARC Document. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gibraltar Industries and ARC Document.

Diversification Opportunities for Gibraltar Industries and ARC Document

0.55

Correlation Coefficient

Gibraltar Industries  ARC Document

Very weak diversification

The 3 months correlation between Gibraltar and ARC is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Gibraltar Industries and ARC Document Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ARC Document Solutions 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 ARC Document. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ARC Document Solutions has no effect on the direction of Gibraltar Industries i.e., Gibraltar Industries and ARC Document go up and down completely randomly.

Pair Corralation between Gibraltar Industries and ARC Document

Given the investment horizon of 90 days Gibraltar Industries is expected to under-perform the ARC Document. In addition to that, Gibraltar Industries is 1.43 times more volatile than ARC Document Solutions. It trades about -0.21 of its total potential returns per unit of risk. ARC Document Solutions is currently generating about 0.16 per unit of volatility. If you would invest  266.00  in ARC Document Solutions on January 30, 2024 and sell it today you would earn a total of  10.00  from holding ARC Document Solutions or generate 3.76% return on investment over 90 days.

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

Gibraltar Industries  vs.  ARC Document Solutions

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 latest uncertain performance, the Stock's fundamental indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

ARC Document Solutions

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ARC Document Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Gibraltar Industries and ARC Document

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

The idea behind Gibraltar Industries and ARC Document Solutions 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.