Correlation Between GameStop Corp and Aqua America
Can any of the company-specific risk be diversified away by investing in both GameStop Corp and Aqua America 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 Aqua America into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GameStop Corp and Aqua America, you can compare the effects of market volatilities on GameStop Corp and Aqua America 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 Aqua America. Check out your portfolio center. Please also check ongoing floating volatility patterns of GameStop Corp and Aqua America.
Diversification Opportunities for GameStop Corp and Aqua America
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GameStop and Aqua is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding GameStop Corp and Aqua America in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aqua America 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 Aqua America. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aqua America has no effect on the direction of GameStop Corp i.e., GameStop Corp and Aqua America go up and down completely randomly.
Pair Corralation between GameStop Corp and Aqua America
Assuming the 90 days trading horizon GameStop Corp is expected to under-perform the Aqua America. In addition to that, GameStop Corp is 3.06 times more volatile than Aqua America. It trades about -0.05 of its total potential returns per unit of risk. Aqua America is currently generating about -0.1 per unit of volatility. If you would invest 3,459 in Aqua America on October 20, 2024 and sell it today you would lose (74.00) from holding Aqua America or give up 2.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GameStop Corp vs. Aqua America
Performance |
| Timeline |
| GameStop Corp |
| Aqua America |
GameStop Corp and Aqua America Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GameStop Corp and Aqua America
The main advantage of trading using opposite GameStop Corp and Aqua America positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GameStop Corp position performs unexpectedly, Aqua America 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 Aqua America will offset losses from the drop in Aqua America's long position.| GameStop Corp vs. Highlight Communications AG | GameStop Corp vs. Nippon Light Metal | GameStop Corp vs. Air Transport Services | GameStop Corp vs. Cars Inc |
| Aqua America vs. Scientific Games | Aqua America vs. GameStop Corp | Aqua America vs. CN MODERN DAIRY | Aqua America vs. AUSNUTRIA DAIRY |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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