Correlation Between GameStop Corp and Sleep Number
Can any of the company-specific risk be diversified away by investing in both GameStop Corp and Sleep Number 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 Sleep Number into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GameStop Corp and Sleep Number Corp, you can compare the effects of market volatilities on GameStop Corp and Sleep Number 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 Sleep Number. Check out your portfolio center. Please also check ongoing floating volatility patterns of GameStop Corp and Sleep Number.
Diversification Opportunities for GameStop Corp and Sleep Number
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between GameStop and Sleep is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding GameStop Corp and Sleep Number Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sleep Number 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 Sleep Number. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sleep Number Corp has no effect on the direction of GameStop Corp i.e., GameStop Corp and Sleep Number go up and down completely randomly.
Pair Corralation between GameStop Corp and Sleep Number
Considering the 90-day investment horizon GameStop Corp is expected to generate 1.39 times more return on investment than Sleep Number. However, GameStop Corp is 1.39 times more volatile than Sleep Number Corp. It trades about 0.04 of its potential returns per unit of risk. Sleep Number Corp is currently generating about 0.0 per unit of risk. If you would invest 2,556 in GameStop Corp on August 24, 2024 and sell it today you would earn a total of 234.00 from holding GameStop Corp or generate 9.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GameStop Corp vs. Sleep Number Corp
Performance |
| Timeline |
| GameStop Corp |
| Sleep Number Corp |
GameStop Corp and Sleep Number Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GameStop Corp and Sleep Number
The main advantage of trading using opposite GameStop Corp and Sleep Number positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GameStop Corp position performs unexpectedly, Sleep Number 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 Sleep Number will offset losses from the drop in Sleep Number's long position.| GameStop Corp vs. RH | GameStop Corp vs. Dicks Sporting Goods | GameStop Corp vs. Best Buy Co | GameStop Corp vs. AutoZone |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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