Correlation Between GAMING FAC and GAMESTOP
Can any of the company-specific risk be diversified away by investing in both GAMING FAC and GAMESTOP 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 FAC and GAMESTOP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GAMING FAC SA and GAMESTOP, you can compare the effects of market volatilities on GAMING FAC and GAMESTOP 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 FAC with a short position of GAMESTOP. Check out your portfolio center. Please also check ongoing floating volatility patterns of GAMING FAC and GAMESTOP.
Diversification Opportunities for GAMING FAC and GAMESTOP
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GAMING and GAMESTOP is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding GAMING FAC SA and GAMESTOP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GAMESTOP and GAMING FAC 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 FAC SA are associated (or correlated) with GAMESTOP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GAMESTOP has no effect on the direction of GAMING FAC i.e., GAMING FAC and GAMESTOP go up and down completely randomly.
Pair Corralation between GAMING FAC and GAMESTOP
Assuming the 90 days horizon GAMING FAC is expected to generate 2.35 times less return on investment than GAMESTOP. But when comparing it to its historical volatility, GAMING FAC SA is 2.25 times less risky than GAMESTOP. It trades about 0.04 of its potential returns per unit of risk. GAMESTOP is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 2,251 in GAMESTOP on August 27, 2024 and sell it today you would earn a total of 384.00 from holding GAMESTOP or generate 17.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GAMING FAC SA vs. GAMESTOP
Performance |
| Timeline |
| GAMING FAC SA |
| GAMESTOP |
GAMING FAC and GAMESTOP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GAMING FAC and GAMESTOP
The main advantage of trading using opposite GAMING FAC and GAMESTOP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GAMING FAC position performs unexpectedly, GAMESTOP 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 GAMESTOP will offset losses from the drop in GAMESTOP's long position.The idea behind GAMING FAC SA and GAMESTOP 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.| GAMESTOP vs. DiamondRock Hospitality | GAMESTOP vs. GUARDANT HEALTH CL | GAMESTOP vs. ASPEN TECHINC DL | GAMESTOP vs. FEMALE HEALTH |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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