Correlation Between IMPERIAL TOBACCO and GameStop Corp
Can any of the company-specific risk be diversified away by investing in both IMPERIAL TOBACCO and GameStop 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 IMPERIAL TOBACCO and GameStop Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IMPERIAL TOBACCO and GameStop Corp, you can compare the effects of market volatilities on IMPERIAL TOBACCO and GameStop 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 IMPERIAL TOBACCO with a short position of GameStop Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of IMPERIAL TOBACCO and GameStop Corp.
Diversification Opportunities for IMPERIAL TOBACCO and GameStop Corp
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between IMPERIAL and GameStop is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding IMPERIAL TOBACCO and GameStop Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GameStop Corp and IMPERIAL TOBACCO 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 IMPERIAL TOBACCO are associated (or correlated) with GameStop Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GameStop Corp has no effect on the direction of IMPERIAL TOBACCO i.e., IMPERIAL TOBACCO and GameStop Corp go up and down completely randomly.
Pair Corralation between IMPERIAL TOBACCO and GameStop Corp
Assuming the 90 days trading horizon IMPERIAL TOBACCO is expected to generate 0.33 times more return on investment than GameStop Corp. However, IMPERIAL TOBACCO is 3.0 times less risky than GameStop Corp. It trades about 0.53 of its potential returns per unit of risk. GameStop Corp is currently generating about 0.04 per unit of risk. If you would invest 2,783 in IMPERIAL TOBACCO on September 13, 2024 and sell it today you would earn a total of 370.00 from holding IMPERIAL TOBACCO or generate 13.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
IMPERIAL TOBACCO vs. GameStop Corp
Performance |
| Timeline |
| IMPERIAL TOBACCO |
| GameStop Corp |
IMPERIAL TOBACCO and GameStop Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IMPERIAL TOBACCO and GameStop Corp
The main advantage of trading using opposite IMPERIAL TOBACCO and GameStop Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IMPERIAL TOBACCO position performs unexpectedly, GameStop 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 GameStop Corp will offset losses from the drop in GameStop Corp's long position.| IMPERIAL TOBACCO vs. SLR Investment Corp | IMPERIAL TOBACCO vs. CyberArk Software | IMPERIAL TOBACCO vs. PennantPark Investment | IMPERIAL TOBACCO vs. ECHO INVESTMENT ZY |
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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 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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