Correlation Between Union Pacific and GAMESTOP
Can any of the company-specific risk be diversified away by investing in both Union Pacific 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 Union Pacific and GAMESTOP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Union Pacific and GAMESTOP, you can compare the effects of market volatilities on Union Pacific 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 Union Pacific with a short position of GAMESTOP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Union Pacific and GAMESTOP.
Diversification Opportunities for Union Pacific and GAMESTOP
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Union and GAMESTOP is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Union Pacific and GAMESTOP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GAMESTOP and Union Pacific 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 Union Pacific 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 Union Pacific i.e., Union Pacific and GAMESTOP go up and down completely randomly.
Pair Corralation between Union Pacific and GAMESTOP
Assuming the 90 days horizon Union Pacific is expected to generate 3.82 times less return on investment than GAMESTOP. But when comparing it to its historical volatility, Union Pacific is 2.13 times less risky than GAMESTOP. It trades about 0.15 of its potential returns per unit of risk. GAMESTOP is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 2,047 in GAMESTOP on September 5, 2024 and sell it today you would earn a total of 545.00 from holding GAMESTOP or generate 26.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Union Pacific vs. GAMESTOP
Performance |
| Timeline |
| Union Pacific |
| GAMESTOP |
Union Pacific and GAMESTOP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Union Pacific and GAMESTOP
The main advantage of trading using opposite Union Pacific and GAMESTOP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Union Pacific 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.| Union Pacific vs. DIVERSIFIED ROYALTY | Union Pacific vs. PennyMac Mortgage Investment | Union Pacific vs. National Storage Affiliates | Union Pacific vs. Japan Asia 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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