Correlation Between GAMESTOP and Greencoat
Can any of the company-specific risk be diversified away by investing in both GAMESTOP and Greencoat 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 and Greencoat into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GAMESTOP and Greencoat UK Wind, you can compare the effects of market volatilities on GAMESTOP and Greencoat 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 with a short position of Greencoat. Check out your portfolio center. Please also check ongoing floating volatility patterns of GAMESTOP and Greencoat.
Diversification Opportunities for GAMESTOP and Greencoat
Excellent diversification
The 3 months correlation between GAMESTOP and Greencoat is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding GAMESTOP and Greencoat UK Wind in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Greencoat UK Wind and GAMESTOP 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 are associated (or correlated) with Greencoat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Greencoat UK Wind has no effect on the direction of GAMESTOP i.e., GAMESTOP and Greencoat go up and down completely randomly.
Pair Corralation between GAMESTOP and Greencoat
Assuming the 90 days trading horizon GAMESTOP is expected to generate 2.72 times more return on investment than Greencoat. However, GAMESTOP is 2.72 times more volatile than Greencoat UK Wind. It trades about 0.04 of its potential returns per unit of risk. Greencoat UK Wind is currently generating about 0.02 per unit of risk. If you would invest 1,922 in GAMESTOP on September 12, 2024 and sell it today you would earn a total of 645.00 from holding GAMESTOP or generate 33.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GAMESTOP vs. Greencoat UK Wind
Performance |
| Timeline |
| GAMESTOP |
| Greencoat UK Wind |
GAMESTOP and Greencoat Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GAMESTOP and Greencoat
The main advantage of trading using opposite GAMESTOP and Greencoat positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GAMESTOP position performs unexpectedly, Greencoat 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 Greencoat will offset losses from the drop in Greencoat's long position.The idea behind GAMESTOP and Greencoat UK Wind pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Greencoat vs. National Storage Affiliates | Greencoat vs. TYSON FOODS A | Greencoat vs. Data3 Limited | Greencoat vs. PUBLIC STORAGE PRFO |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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