Correlation Between GameStop Corp and PGE Corp
Can any of the company-specific risk be diversified away by investing in both GameStop Corp and PGE Corp 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 PGE Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GameStop Corp and PGE Corp, you can compare the effects of market volatilities on GameStop Corp and PGE Corp 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 PGE Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of GameStop Corp and PGE Corp.
Diversification Opportunities for GameStop Corp and PGE Corp
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between GameStop and PGE is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding GameStop Corp and PGE Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PGE Corp 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 PGE Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PGE Corp has no effect on the direction of GameStop Corp i.e., GameStop Corp and PGE Corp go up and down completely randomly.
Pair Corralation between GameStop Corp and PGE Corp
Considering the 90-day investment horizon GameStop Corp is expected to generate 4.27 times more return on investment than PGE Corp. However, GameStop Corp is 4.27 times more volatile than PGE Corp. It trades about 0.37 of its potential returns per unit of risk. PGE Corp is currently generating about 0.45 per unit of risk. If you would invest 2,241 in GameStop Corp on September 2, 2024 and sell it today you would earn a total of 664.00 from holding GameStop Corp or generate 29.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
GameStop Corp vs. PGE Corp
Performance |
| Timeline |
| GameStop Corp |
| PGE Corp |
GameStop Corp and PGE Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GameStop Corp and PGE Corp
The main advantage of trading using opposite GameStop Corp and PGE Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GameStop Corp position performs unexpectedly, PGE Corp 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 PGE Corp will offset losses from the drop in PGE Corp's long position.| GameStop Corp vs. RH | GameStop Corp vs. Dicks Sporting Goods | GameStop Corp vs. Best Buy Co | GameStop Corp vs. AutoZone |
| PGE Corp vs. Consolidated Edison | PGE Corp vs. Southern Company | PGE Corp vs. Entergy | PGE Corp vs. Pinnacle West Capital |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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