Correlation Between Corpay and GameStop Corp

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

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

Diversification Opportunities for Corpay and GameStop Corp

0.53

Correlation Coefficient

Corpay  GameStop Corp

Very weak diversification

The 3 months correlation between Corpay and GameStop is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Corpay Inc and GameStop Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GameStop Corp and Corpay 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 Corpay Inc 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 Corpay i.e., Corpay and GameStop Corp go up and down completely randomly.

Pair Corralation between Corpay and GameStop Corp

Given the investment horizon of 90 days Corpay is expected to generate 2.64 times less return on investment than GameStop Corp. But when comparing it to its historical volatility, Corpay Inc is 4.53 times less risky than GameStop Corp. It trades about 0.08 of its potential returns per unit of risk. GameStop Corp is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  2,049  in GameStop Corp on October 4, 2024 and sell it today you would earn a total of  993.00  from holding GameStop Corp or generate 48.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Corpay Inc  vs.  GameStop Corp

Corpay Inc

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Corpay Inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Corpay is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

GameStop Corp

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GameStop Corp are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent primary indicators, GameStop Corp exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Corpay and GameStop Corp

The main advantage of trading using opposite Corpay and GameStop Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Corpay 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.

The idea behind Corpay Inc and GameStop Corp 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.

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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.