Correlation Between GameStop Corp and PennantPark Investment
Can any of the company-specific risk be diversified away by investing in both GameStop Corp and PennantPark Investment 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 PennantPark Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GameStop Corp and PennantPark Investment, you can compare the effects of market volatilities on GameStop Corp and PennantPark Investment 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 PennantPark Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of GameStop Corp and PennantPark Investment.
Diversification Opportunities for GameStop Corp and PennantPark Investment
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between GameStop and PennantPark is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding GameStop Corp and PennantPark Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PennantPark Investment 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 PennantPark Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PennantPark Investment has no effect on the direction of GameStop Corp i.e., GameStop Corp and PennantPark Investment go up and down completely randomly.
Pair Corralation between GameStop Corp and PennantPark Investment
Considering the 90-day investment horizon GameStop Corp is expected to generate 6.08 times more return on investment than PennantPark Investment. However, GameStop Corp is 6.08 times more volatile than PennantPark Investment. It trades about 0.04 of its potential returns per unit of risk. PennantPark Investment is currently generating about -0.02 per unit of risk. If you would invest 2,800 in GameStop Corp on September 1, 2024 and sell it today you would earn a total of 105.00 from holding GameStop Corp or generate 3.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GameStop Corp vs. PennantPark Investment
Performance |
| Timeline |
| GameStop Corp |
| PennantPark Investment |
GameStop Corp and PennantPark Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GameStop Corp and PennantPark Investment
The main advantage of trading using opposite GameStop Corp and PennantPark Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GameStop Corp position performs unexpectedly, PennantPark Investment 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 PennantPark Investment will offset losses from the drop in PennantPark Investment's long position.| GameStop Corp vs. RH | GameStop Corp vs. Dicks Sporting Goods | GameStop Corp vs. Best Buy Co | GameStop Corp vs. AutoZone |
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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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