Correlation Between GameStop Corp and Playstudios
Can any of the company-specific risk be diversified away by investing in both GameStop Corp and Playstudios 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 Playstudios into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GameStop Corp and Playstudios, you can compare the effects of market volatilities on GameStop Corp and Playstudios 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 Playstudios. Check out your portfolio center. Please also check ongoing floating volatility patterns of GameStop Corp and Playstudios.
Diversification Opportunities for GameStop Corp and Playstudios
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GameStop and Playstudios is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding GameStop Corp and Playstudios in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Playstudios 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 Playstudios. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Playstudios has no effect on the direction of GameStop Corp i.e., GameStop Corp and Playstudios go up and down completely randomly.
Pair Corralation between GameStop Corp and Playstudios
Considering the 90-day investment horizon GameStop Corp is expected to generate 1.01 times less return on investment than Playstudios. But when comparing it to its historical volatility, GameStop Corp is 1.21 times less risky than Playstudios. It trades about 0.39 of its potential returns per unit of risk. Playstudios is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 139.00 in Playstudios on August 28, 2024 and sell it today you would earn a total of 42.00 from holding Playstudios or generate 30.22% 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. Playstudios
Performance |
| Timeline |
| GameStop Corp |
| Playstudios |
GameStop Corp and Playstudios Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GameStop Corp and Playstudios
The main advantage of trading using opposite GameStop Corp and Playstudios positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GameStop Corp position performs unexpectedly, Playstudios 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 Playstudios will offset losses from the drop in Playstudios' long position.| GameStop Corp vs. RH | GameStop Corp vs. Dicks Sporting Goods | GameStop Corp vs. Best Buy Co | GameStop Corp vs. AutoZone |
| Playstudios vs. SohuCom | Playstudios vs. Snail, Class A | Playstudios vs. Playtika Holding Corp | Playstudios vs. Golden Matrix Group |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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