Correlation Between VIVA WINE and GAMESTOP

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Can any of the company-specific risk be diversified away by investing in both VIVA WINE and GAMESTOP 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 VIVA WINE and GAMESTOP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VIVA WINE GROUP and GAMESTOP, you can compare the effects of market volatilities on VIVA WINE and GAMESTOP 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 VIVA WINE with a short position of GAMESTOP. Check out your portfolio center. Please also check ongoing floating volatility patterns of VIVA WINE and GAMESTOP.

Diversification Opportunities for VIVA WINE and GAMESTOP

-0.64
  Correlation Coefficient

Excellent diversification

The 3 months correlation between VIVA and GAMESTOP is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding VIVA WINE GROUP and GAMESTOP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GAMESTOP and VIVA WINE 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 VIVA WINE GROUP are associated (or correlated) with GAMESTOP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GAMESTOP has no effect on the direction of VIVA WINE i.e., VIVA WINE and GAMESTOP go up and down completely randomly.

Pair Corralation between VIVA WINE and GAMESTOP

Assuming the 90 days horizon VIVA WINE is expected to generate 1.34 times less return on investment than GAMESTOP. But when comparing it to its historical volatility, VIVA WINE GROUP is 1.93 times less risky than GAMESTOP. It trades about 0.06 of its potential returns per unit of risk. GAMESTOP is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  2,293  in GAMESTOP on August 27, 2024 and sell it today you would earn a total of  342.00  from holding GAMESTOP or generate 14.91% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

VIVA WINE GROUP  vs.  GAMESTOP

 Performance 
       Timeline  
VIVA WINE GROUP 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days VIVA WINE GROUP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.
GAMESTOP 

Risk-Adjusted Performance

12 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in GAMESTOP are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, GAMESTOP unveiled solid returns over the last few months and may actually be approaching a breakup point.

VIVA WINE and GAMESTOP Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with VIVA WINE and GAMESTOP

The main advantage of trading using opposite VIVA WINE and GAMESTOP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VIVA WINE position performs unexpectedly, GAMESTOP 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 will offset losses from the drop in GAMESTOP's long position.
The idea behind VIVA WINE GROUP and GAMESTOP 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.
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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.

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