Correlation Between GABY and PetMed Express

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

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

Diversification Opportunities for GABY and PetMed Express

0.0

Correlation Coefficient

GABY  PetMed Express

Pay attention - limited upside

The 3 months correlation between GABY and PetMed is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding GABY Inc and PetMed Express in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PetMed Express and GABY 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 GABY Inc are associated (or correlated) with PetMed Express. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PetMed Express has no effect on the direction of GABY i.e., GABY and PetMed Express go up and down completely randomly.

Pair Corralation between GABY and PetMed Express

Assuming the 90 days horizon GABY Inc is expected to generate 0.34 times more return on investment than PetMed Express. However, GABY Inc is 2.92 times less risky than PetMed Express. It trades about 0.21 of its potential returns per unit of risk. PetMed Express is currently generating about -0.31 per unit of risk. If you would invest  0.14  in GABY Inc on February 4, 2024 and sell it today you would earn a total of  0.01  from holding GABY Inc or generate 3.57% return on investment over 90 days.

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

GABY Inc  vs.  PetMed Express

GABY Inc

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in GABY Inc are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable essential indicators, GABY is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

PetMed Express

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PetMed Express has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in June 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with GABY and PetMed Express

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

The idea behind GABY Inc and PetMed Express 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.