Correlation Between GameStop Corp and Herc Holdings
Can any of the company-specific risk be diversified away by investing in both GameStop Corp and Herc Holdings 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 Herc Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GameStop Corp and Herc Holdings, you can compare the effects of market volatilities on GameStop Corp and Herc Holdings 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 Herc Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of GameStop Corp and Herc Holdings.
Diversification Opportunities for GameStop Corp and Herc Holdings
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GameStop and Herc is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding GameStop Corp and Herc Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Herc Holdings 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 Herc Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Herc Holdings has no effect on the direction of GameStop Corp i.e., GameStop Corp and Herc Holdings go up and down completely randomly.
Pair Corralation between GameStop Corp and Herc Holdings
Considering the 90-day investment horizon GameStop Corp is expected to generate 1.17 times more return on investment than Herc Holdings. However, GameStop Corp is 1.17 times more volatile than Herc Holdings. It trades about 0.39 of its potential returns per unit of risk. Herc Holdings is currently generating about 0.18 per unit of risk. If you would invest 2,218 in GameStop Corp on September 1, 2024 and sell it today you would earn a total of 687.00 from holding GameStop Corp or generate 30.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GameStop Corp vs. Herc Holdings
Performance |
| Timeline |
| GameStop Corp |
| Herc Holdings |
GameStop Corp and Herc Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GameStop Corp and Herc Holdings
The main advantage of trading using opposite GameStop Corp and Herc Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GameStop Corp position performs unexpectedly, Herc Holdings 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 Herc Holdings will offset losses from the drop in Herc Holdings' long position.| GameStop Corp vs. RH | GameStop Corp vs. Dicks Sporting Goods | GameStop Corp vs. Best Buy Co | GameStop Corp vs. AutoZone |
| Herc Holdings vs. McGrath RentCorp | Herc Holdings vs. Alta Equipment Group | Herc Holdings vs. Custom Truck One | Herc Holdings vs. GATX Corporation |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
Other Complementary Tools
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites |