Correlation Between GameStop Corp and Arhaus
Can any of the company-specific risk be diversified away by investing in both GameStop Corp and Arhaus 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 GameStop Corp and Arhaus into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GameStop Corp and Arhaus Inc, you can compare the effects of market volatilities on GameStop Corp and Arhaus 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 GameStop Corp with a short position of Arhaus. Check out your portfolio center. Please also check ongoing floating volatility patterns of GameStop Corp and Arhaus.
Diversification Opportunities for GameStop Corp and Arhaus
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GameStop and Arhaus is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding GameStop Corp and Arhaus Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arhaus Inc and GameStop Corp 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 GameStop Corp are associated (or correlated) with Arhaus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arhaus Inc has no effect on the direction of GameStop Corp i.e., GameStop Corp and Arhaus go up and down completely randomly.
Pair Corralation between GameStop Corp and Arhaus
Considering the 90-day investment horizon GameStop Corp is expected to generate 1.01 times more return on investment than Arhaus. However, GameStop Corp is 1.01 times more volatile than Arhaus Inc. It trades about 0.43 of its potential returns per unit of risk. Arhaus Inc is currently generating about 0.25 per unit of risk. If you would invest 2,268 in GameStop Corp on August 30, 2024 and sell it today you would earn a total of 821.00 from holding GameStop Corp or generate 36.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GameStop Corp vs. Arhaus Inc
Performance |
| Timeline |
| GameStop Corp |
| Arhaus Inc |
GameStop Corp and Arhaus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GameStop Corp and Arhaus
The main advantage of trading using opposite GameStop Corp and Arhaus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GameStop Corp position performs unexpectedly, Arhaus 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 Arhaus will offset losses from the drop in Arhaus' long position.| GameStop Corp vs. RH | GameStop Corp vs. Dicks Sporting Goods | GameStop Corp vs. Best Buy Co | GameStop Corp vs. AutoZone |
| Arhaus vs. Purple Innovation | Arhaus vs. Mohawk Industries | Arhaus vs. La Z Boy Incorporated | Arhaus vs. Leggett Platt Incorporated |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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