Correlation Between GAMESTOP and Westaim Corp
Can any of the company-specific risk be diversified away by investing in both GAMESTOP and Westaim Corp 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 Westaim Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GAMESTOP and The Westaim Corp, you can compare the effects of market volatilities on GAMESTOP and Westaim Corp 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 Westaim Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of GAMESTOP and Westaim Corp.
Diversification Opportunities for GAMESTOP and Westaim Corp
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GAMESTOP and Westaim is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding GAMESTOP and The Westaim Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westaim Corp 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 Westaim Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westaim Corp has no effect on the direction of GAMESTOP i.e., GAMESTOP and Westaim Corp go up and down completely randomly.
Pair Corralation between GAMESTOP and Westaim Corp
Assuming the 90 days trading horizon GAMESTOP is expected to under-perform the Westaim Corp. In addition to that, GAMESTOP is 5.09 times more volatile than The Westaim Corp. It trades about -0.02 of its total potential returns per unit of risk. The Westaim Corp is currently generating about 0.05 per unit of volatility. If you would invest 1,980 in The Westaim Corp on October 30, 2024 and sell it today you would earn a total of 24.00 from holding The Westaim Corp or generate 1.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GAMESTOP vs. The Westaim Corp
Performance |
| Timeline |
| GAMESTOP |
| Westaim Corp |
GAMESTOP and Westaim Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GAMESTOP and Westaim Corp
The main advantage of trading using opposite GAMESTOP and Westaim Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GAMESTOP position performs unexpectedly, Westaim Corp 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 Westaim Corp will offset losses from the drop in Westaim Corp's long position.| GAMESTOP vs. TELECOM ITALIA | GAMESTOP vs. CITIC Telecom International | GAMESTOP vs. China Communications Services | GAMESTOP vs. SK TELECOM TDADR |
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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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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