Correlation Between GP Investments and Tractor Supply

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

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

Diversification Opportunities for GP Investments and Tractor Supply

-0.42

Correlation Coefficient

GP Investments  Tractor Supply

Very good diversification

The 3 months correlation between GPIV33 and Tractor is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding GP Investments and Tractor Supply in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tractor Supply and GP Investments 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 GP Investments are associated (or correlated) with Tractor Supply. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tractor Supply has no effect on the direction of GP Investments i.e., GP Investments and Tractor Supply go up and down completely randomly.

Pair Corralation between GP Investments and Tractor Supply

Assuming the 90 days trading horizon GP Investments is expected to under-perform the Tractor Supply. In addition to that, GP Investments is 1.13 times more volatile than Tractor Supply. It trades about -0.06 of its total potential returns per unit of risk. Tractor Supply is currently generating about 0.09 per unit of volatility. If you would invest  1,601  in Tractor Supply on April 23, 2025 and sell it today you would earn a total of  147.00  from holding Tractor Supply or generate 9.18% return on investment over 90 days.

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

GP Investments  vs.  Tractor Supply

GP Investments

Risk-Adjusted Performance

Very Weak

Over the last 90 days GP Investments has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Tractor Supply

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tractor Supply are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Tractor Supply may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with GP Investments and Tractor Supply

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

The idea behind GP Investments and Tractor Supply 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.