Correlation Between Ribbon Communications and GAMESTOP
Can any of the company-specific risk be diversified away by investing in both Ribbon Communications 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 Ribbon Communications and GAMESTOP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ribbon Communications and GAMESTOP, you can compare the effects of market volatilities on Ribbon Communications 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 Ribbon Communications with a short position of GAMESTOP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ribbon Communications and GAMESTOP.
Diversification Opportunities for Ribbon Communications and GAMESTOP
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Ribbon and GAMESTOP is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Ribbon Communications and GAMESTOP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GAMESTOP and Ribbon Communications 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 Ribbon Communications 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 Ribbon Communications i.e., Ribbon Communications and GAMESTOP go up and down completely randomly.
Pair Corralation between Ribbon Communications and GAMESTOP
Assuming the 90 days trading horizon Ribbon Communications is expected to generate 28.66 times less return on investment than GAMESTOP. But when comparing it to its historical volatility, Ribbon Communications is 1.76 times less risky than GAMESTOP. It trades about 0.01 of its potential returns per unit of risk. GAMESTOP is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 2,579 in GAMESTOP on October 11, 2024 and sell it today you would earn a total of 624.00 from holding GAMESTOP or generate 24.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 97.44% |
| Values | Daily Returns |
Ribbon Communications vs. GAMESTOP
Performance |
| Timeline |
| Ribbon Communications |
| GAMESTOP |
Ribbon Communications and GAMESTOP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ribbon Communications and GAMESTOP
The main advantage of trading using opposite Ribbon Communications and GAMESTOP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ribbon Communications 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.| Ribbon Communications vs. De Grey Mining | Ribbon Communications vs. Harmony Gold Mining | Ribbon Communications vs. United States Steel | Ribbon Communications vs. Forsys Metals Corp |
| GAMESTOP vs. EVS Broadcast Equipment | GAMESTOP vs. EIDESVIK OFFSHORE NK | GAMESTOP vs. MidCap Financial Investment | GAMESTOP vs. New Residential Investment |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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