Correlation Between GameStop Corp and Nufarm
Can any of the company-specific risk be diversified away by investing in both GameStop Corp and Nufarm 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 Nufarm into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GameStop Corp and Nufarm Limited, you can compare the effects of market volatilities on GameStop Corp and Nufarm 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 Nufarm. Check out your portfolio center. Please also check ongoing floating volatility patterns of GameStop Corp and Nufarm.
Diversification Opportunities for GameStop Corp and Nufarm
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between GameStop and Nufarm is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding GameStop Corp and Nufarm Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nufarm Limited 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 Nufarm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nufarm Limited has no effect on the direction of GameStop Corp i.e., GameStop Corp and Nufarm go up and down completely randomly.
Pair Corralation between GameStop Corp and Nufarm
Assuming the 90 days trading horizon GameStop Corp is expected to generate 3.85 times more return on investment than Nufarm. However, GameStop Corp is 3.85 times more volatile than Nufarm Limited. It trades about 0.04 of its potential returns per unit of risk. Nufarm Limited is currently generating about -0.07 per unit of risk. If you would invest 2,540 in GameStop Corp on September 2, 2024 and sell it today you would earn a total of 143.00 from holding GameStop Corp or generate 5.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GameStop Corp vs. Nufarm Limited
Performance |
| Timeline |
| GameStop Corp |
| Nufarm Limited |
GameStop Corp and Nufarm Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GameStop Corp and Nufarm
The main advantage of trading using opposite GameStop Corp and Nufarm positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GameStop Corp position performs unexpectedly, Nufarm 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 Nufarm will offset losses from the drop in Nufarm's long position.| GameStop Corp vs. Texas Roadhouse | GameStop Corp vs. BROADSTNET LEADL 00025 | GameStop Corp vs. Nishi Nippon Railroad Co | GameStop Corp vs. CAREER EDUCATION |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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