Correlation Between GameStop Corp and Welltower
Can any of the company-specific risk be diversified away by investing in both GameStop Corp and Welltower 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 Welltower into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GameStop Corp and Welltower, you can compare the effects of market volatilities on GameStop Corp and Welltower 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 Welltower. Check out your portfolio center. Please also check ongoing floating volatility patterns of GameStop Corp and Welltower.
Diversification Opportunities for GameStop Corp and Welltower
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between GameStop and Welltower is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding GameStop Corp and Welltower in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Welltower 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 Welltower. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Welltower has no effect on the direction of GameStop Corp i.e., GameStop Corp and Welltower go up and down completely randomly.
Pair Corralation between GameStop Corp and Welltower
Assuming the 90 days trading horizon GameStop Corp is expected to generate 5.72 times more return on investment than Welltower. However, GameStop Corp is 5.72 times more volatile than Welltower. It trades about 0.05 of its potential returns per unit of risk. Welltower is currently generating about 0.11 per unit of risk. If you would invest 1,688 in GameStop Corp on September 14, 2024 and sell it today you would earn a total of 1,054 from holding GameStop Corp or generate 62.44% 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. Welltower
Performance |
| Timeline |
| GameStop Corp |
| Welltower |
GameStop Corp and Welltower Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GameStop Corp and Welltower
The main advantage of trading using opposite GameStop Corp and Welltower positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GameStop Corp position performs unexpectedly, Welltower 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 Welltower will offset losses from the drop in Welltower's long position.| GameStop Corp vs. Superior Plus Corp | GameStop Corp vs. SIVERS SEMICONDUCTORS AB | GameStop Corp vs. NorAm Drilling AS | GameStop Corp vs. Norsk Hydro ASA |
| Welltower vs. GameStop Corp | Welltower vs. Hochschild Mining plc | Welltower vs. International Game Technology | Welltower vs. Jacquet Metal Service |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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