Correlation Between Falcons Beyond and GameStop Corp

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

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

Diversification Opportunities for Falcons Beyond and GameStop Corp

0.21

Correlation Coefficient

Falcons Beyond  GameStop Corp

Modest diversification

The 3 months correlation between Falcons and GameStop is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Falcons Beyond Global, and GameStop Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GameStop Corp and Falcons Beyond 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 Falcons Beyond Global, 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 Falcons Beyond i.e., Falcons Beyond and GameStop Corp go up and down completely randomly.

Pair Corralation between Falcons Beyond and GameStop Corp

Assuming the 90 days horizon Falcons Beyond Global, is expected to generate 7.98 times more return on investment than GameStop Corp. However, Falcons Beyond is 7.98 times more volatile than GameStop Corp. It trades about 0.08 of its potential returns per unit of risk. GameStop Corp is currently generating about -0.1 per unit of risk. If you would invest  110.00  in Falcons Beyond Global, on December 21, 2024 and sell it today you would lose (12.00) from holding Falcons Beyond Global, or give up 10.91% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	73.33%
Values	Daily Returns

Falcons Beyond Global,  vs.  GameStop Corp

Falcons Beyond Global,

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Falcons Beyond Global, are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental indicators, Falcons Beyond showed solid returns over the last few months and may actually be approaching a breakup point.

GameStop Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days GameStop Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's primary indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Falcons Beyond and GameStop Corp

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

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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.