Correlation Between GameStop Corp and Merit Medical
Can any of the company-specific risk be diversified away by investing in both GameStop Corp and Merit Medical 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 Merit Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GameStop Corp and Merit Medical Systems, you can compare the effects of market volatilities on GameStop Corp and Merit Medical 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 Merit Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of GameStop Corp and Merit Medical.
Diversification Opportunities for GameStop Corp and Merit Medical
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between GameStop and Merit is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding GameStop Corp and Merit Medical Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merit Medical Systems 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 Merit Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Merit Medical Systems has no effect on the direction of GameStop Corp i.e., GameStop Corp and Merit Medical go up and down completely randomly.
Pair Corralation between GameStop Corp and Merit Medical
Assuming the 90 days trading horizon GameStop Corp is expected to generate 2.24 times more return on investment than Merit Medical. However, GameStop Corp is 2.24 times more volatile than Merit Medical Systems. It trades about 0.25 of its potential returns per unit of risk. Merit Medical Systems is currently generating about 0.08 per unit of risk. If you would invest 1,919 in GameStop Corp on September 25, 2024 and sell it today you would earn a total of 942.00 from holding GameStop Corp or generate 49.09% 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. Merit Medical Systems
Performance |
| Timeline |
| GameStop Corp |
| Merit Medical Systems |
GameStop Corp and Merit Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GameStop Corp and Merit Medical
The main advantage of trading using opposite GameStop Corp and Merit Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GameStop Corp position performs unexpectedly, Merit Medical 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 Merit Medical will offset losses from the drop in Merit Medical's long position.| GameStop Corp vs. MercadoLibre | GameStop Corp vs. AutoZone | GameStop Corp vs. Tractor Supply | GameStop Corp vs. Ulta Beauty |
| Merit Medical vs. HOCHSCHILD MINING | Merit Medical vs. Western Copper and | Merit Medical vs. GameStop Corp | Merit Medical vs. FUTURE GAMING GRP |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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