Correlation Between Xero and GAMESTOP

Can any of the company-specific risk be diversified away by investing in both Xero 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 Xero and GAMESTOP into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Xero and GAMESTOP, you can compare the effects of market volatilities on Xero 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 Xero with a short position of GAMESTOP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xero and GAMESTOP.

Diversification Opportunities for Xero and GAMESTOP

0.0

Correlation Coefficient

Xero  GAMESTOP

Pay attention - limited upside

The 3 months correlation between Xero and GAMESTOP is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Xero and GAMESTOP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GAMESTOP and Xero 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 Xero 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 Xero i.e., Xero and GAMESTOP go up and down completely randomly.

Pair Corralation between Xero and GAMESTOP

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	Flat
Strength	Insignificant
Accuracy	2.56%
Values	Daily Returns

Xero  vs.  GAMESTOP

Xero

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Xero has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Xero is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

GAMESTOP

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in GAMESTOP are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, GAMESTOP unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Xero and GAMESTOP

The main advantage of trading using opposite Xero and GAMESTOP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xero 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 Xero 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.