Correlation Between GameStop Corp and Dairy Farm
Can any of the company-specific risk be diversified away by investing in both GameStop Corp and Dairy Farm 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 Dairy Farm into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GameStop Corp and Dairy Farm International, you can compare the effects of market volatilities on GameStop Corp and Dairy Farm 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 Dairy Farm. Check out your portfolio center. Please also check ongoing floating volatility patterns of GameStop Corp and Dairy Farm.
Diversification Opportunities for GameStop Corp and Dairy Farm
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between GameStop and Dairy is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding GameStop Corp and Dairy Farm International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dairy Farm International 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 Dairy Farm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dairy Farm International has no effect on the direction of GameStop Corp i.e., GameStop Corp and Dairy Farm go up and down completely randomly.
Pair Corralation between GameStop Corp and Dairy Farm
Assuming the 90 days trading horizon GameStop Corp is expected to generate 3.06 times more return on investment than Dairy Farm. However, GameStop Corp is 3.06 times more volatile than Dairy Farm International. It trades about 0.04 of its potential returns per unit of risk. Dairy Farm International is currently generating about -0.01 per unit of risk. If you would invest 1,956 in GameStop Corp on October 29, 2024 and sell it today you would earn a total of 642.00 from holding GameStop Corp or generate 32.82% 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. Dairy Farm International
Performance |
| Timeline |
| GameStop Corp |
| Dairy Farm International |
GameStop Corp and Dairy Farm Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GameStop Corp and Dairy Farm
The main advantage of trading using opposite GameStop Corp and Dairy Farm positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GameStop Corp position performs unexpectedly, Dairy Farm 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 Dairy Farm will offset losses from the drop in Dairy Farm's long position.| GameStop Corp vs. CVS Health | GameStop Corp vs. Molina Healthcare | GameStop Corp vs. Highlight Communications AG | GameStop Corp vs. Chunghwa Telecom Co |
| Dairy Farm vs. NEWELL RUBBERMAID | Dairy Farm vs. GLG LIFE TECH | Dairy Farm vs. Addtech AB | Dairy Farm vs. Summit Materials |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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