Correlation Between Contagious Gaming and SPTSX Dividend

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Apply Can any of the company-specific risk be diversified away by investing in both Contagious Gaming and SPTSX Dividend 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 Contagious Gaming and SPTSX Dividend into the same portfolio, which is an essential part of the fundamental portfolio management process.

Diversification Opportunities for Contagious Gaming and SPTSX Dividend

Pair Corralation between Contagious Gaming and SPTSX Dividend

Contagious Gaming  vs.  SPTSX Dividend Aristocrats

Pair Trading with Contagious Gaming and SPTSX Dividend

The main advantage of trading using opposite Contagious Gaming and SPTSX Dividend positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Contagious Gaming position performs unexpectedly, SPTSX Dividend 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 SPTSX Dividend will offset losses from the drop in SPTSX Dividend's long position.The idea behind Contagious Gaming and SPTSX Dividend Aristocrats 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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