Correlation Between GT Capital and Swift Foods

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

By analyzing existing cross correlation between GT Capital Holdings and Swift Foods, you can compare the effects of market volatilities on GT Capital and Swift Foods 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 GT Capital with a short position of Swift Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of GT Capital and Swift Foods.

Diversification Opportunities for GT Capital and Swift Foods

-0.06

Correlation Coefficient

GT Capital  Swift Foods

Good diversification

The 3 months correlation between GTCAP and Swift is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding GT Capital Holdings and Swift Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Swift Foods and GT Capital 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 GT Capital Holdings are associated (or correlated) with Swift Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Swift Foods has no effect on the direction of GT Capital i.e., GT Capital and Swift Foods go up and down completely randomly.

Pair Corralation between GT Capital and Swift Foods

Assuming the 90 days trading horizon GT Capital is expected to generate 1.12 times less return on investment than Swift Foods. But when comparing it to its historical volatility, GT Capital Holdings is 3.52 times less risky than Swift Foods. It trades about 0.22 of its potential returns per unit of risk. Swift Foods is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  4.90  in Swift Foods on April 22, 2025 and sell it today you would earn a total of  0.50  from holding Swift Foods or generate 10.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	65.57%
Values	Daily Returns

GT Capital Holdings  vs.  Swift Foods

GT Capital Holdings

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in GT Capital Holdings are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak fundamental indicators, GT Capital reported solid returns over the last few months and may actually be approaching a breakup point.

Swift Foods

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Swift Foods are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Swift Foods exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GT Capital and Swift Foods

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

The idea behind GT Capital Holdings and Swift Foods 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.