Correlation Between Globalfoundries and Motorsport Gaming

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

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

Diversification Opportunities for Globalfoundries and Motorsport Gaming

0.18

Correlation Coefficient

Globalfoundries  Motorsport Gaming

Average diversification

The 3 months correlation between Globalfoundries and Motorsport is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Globalfoundries and Motorsport Gaming Us in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Motorsport Gaming and Globalfoundries 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 Globalfoundries are associated (or correlated) with Motorsport Gaming. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Motorsport Gaming has no effect on the direction of Globalfoundries i.e., Globalfoundries and Motorsport Gaming go up and down completely randomly.

Pair Corralation between Globalfoundries and Motorsport Gaming

Considering the 90-day investment horizon Globalfoundries is expected to under-perform the Motorsport Gaming. But the stock apears to be less risky and, when comparing its historical volatility, Globalfoundries is 1.5 times less risky than Motorsport Gaming. The stock trades about -0.06 of its potential returns per unit of risk. The Motorsport Gaming Us is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  125.00  in Motorsport Gaming Us on December 25, 2024 and sell it today you would lose (15.00) from holding Motorsport Gaming Us or give up 12.0% of portfolio value over 90 days.

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

Globalfoundries  vs.  Motorsport Gaming Us

Globalfoundries

Risk-Adjusted Performance

Very Weak

Over the last 90 days Globalfoundries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Motorsport Gaming

Risk-Adjusted Performance

Very Weak

Over the last 90 days Motorsport Gaming Us has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical and fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Globalfoundries and Motorsport Gaming

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

The idea behind Globalfoundries and Motorsport Gaming Us 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.