Correlation Between Gaming and PLAYMATES TOYS
Can any of the company-specific risk be diversified away by investing in both Gaming and PLAYMATES TOYS 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 Gaming and PLAYMATES TOYS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gaming and Leisure and PLAYMATES TOYS, you can compare the effects of market volatilities on Gaming and PLAYMATES TOYS 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 Gaming with a short position of PLAYMATES TOYS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gaming and PLAYMATES TOYS.
Diversification Opportunities for Gaming and PLAYMATES TOYS
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Gaming and PLAYMATES is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Gaming and Leisure and PLAYMATES TOYS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PLAYMATES TOYS and Gaming 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 Gaming and Leisure are associated (or correlated) with PLAYMATES TOYS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PLAYMATES TOYS has no effect on the direction of Gaming i.e., Gaming and PLAYMATES TOYS go up and down completely randomly.
Pair Corralation between Gaming and PLAYMATES TOYS
Assuming the 90 days horizon Gaming and Leisure is expected to generate 0.21 times more return on investment than PLAYMATES TOYS. However, Gaming and Leisure is 4.79 times less risky than PLAYMATES TOYS. It trades about 0.08 of its potential returns per unit of risk. PLAYMATES TOYS is currently generating about -0.01 per unit of risk. If you would invest 4,451 in Gaming and Leisure on October 21, 2024 and sell it today you would earn a total of 79.00 from holding Gaming and Leisure or generate 1.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gaming and Leisure vs. PLAYMATES TOYS
Performance |
| Timeline |
| Gaming and Leisure |
| PLAYMATES TOYS |
Gaming and PLAYMATES TOYS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gaming and PLAYMATES TOYS
The main advantage of trading using opposite Gaming and PLAYMATES TOYS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gaming position performs unexpectedly, PLAYMATES TOYS 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 PLAYMATES TOYS will offset losses from the drop in PLAYMATES TOYS's long position.The idea behind Gaming and Leisure and PLAYMATES TOYS 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.| PLAYMATES TOYS vs. Pentair plc | PLAYMATES TOYS vs. Cars Inc | PLAYMATES TOYS vs. Gaming and Leisure | PLAYMATES TOYS vs. UNIVERSAL DISPLAY |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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