Correlation Between GameSquare Holdings and First Trust

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

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

Diversification Opportunities for GameSquare Holdings and First Trust

0.62

Correlation Coefficient

GameSquare Holdings  First Trust

Poor diversification

The 3 months correlation between GameSquare and First is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding GameSquare Holdings and First Trust S Network in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust S and GameSquare Holdings 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 GameSquare Holdings are associated (or correlated) with First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust S has no effect on the direction of GameSquare Holdings i.e., GameSquare Holdings and First Trust go up and down completely randomly.

Pair Corralation between GameSquare Holdings and First Trust

Given the investment horizon of 90 days GameSquare Holdings is expected to generate 59.13 times less return on investment than First Trust. In addition to that, GameSquare Holdings is 6.12 times more volatile than First Trust S Network. It trades about 0.0 of its total potential returns per unit of risk. First Trust S Network is currently generating about 0.08 per unit of volatility. If you would invest  2,300  in First Trust S Network on October 7, 2024 and sell it today you would earn a total of  523.00  from holding First Trust S Network or generate 22.74% return on investment over 90 days.

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

GameSquare Holdings  vs.  First Trust S Network

GameSquare Holdings

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in GameSquare Holdings are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent primary indicators, GameSquare Holdings exhibited solid returns over the last few months and may actually be approaching a breakup point.

First Trust S

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in First Trust S Network are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, First Trust is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with GameSquare Holdings and First Trust

The main advantage of trading using opposite GameSquare Holdings and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GameSquare Holdings position performs unexpectedly, First Trust 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 First Trust will offset losses from the drop in First Trust's long position.

The idea behind GameSquare Holdings and First Trust S Network 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.