Correlation Between GameStop Corp and Liberty Northwest

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

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

Diversification Opportunities for GameStop Corp and Liberty Northwest

-0.05

Correlation Coefficient

GameStop Corp  Liberty Northwest

Good diversification

The 3 months correlation between GameStop and Liberty is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding GameStop Corp and Liberty Northwest Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liberty Northwest Bancorp and GameStop Corp 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 GameStop Corp are associated (or correlated) with Liberty Northwest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Liberty Northwest Bancorp has no effect on the direction of GameStop Corp i.e., GameStop Corp and Liberty Northwest go up and down completely randomly.

Pair Corralation between GameStop Corp and Liberty Northwest

Considering the 90-day investment horizon GameStop Corp is expected to under-perform the Liberty Northwest. In addition to that, GameStop Corp is 1.49 times more volatile than Liberty Northwest Bancorp. It trades about -0.13 of its total potential returns per unit of risk. Liberty Northwest Bancorp is currently generating about 0.03 per unit of volatility. If you would invest  515.00  in Liberty Northwest Bancorp on October 25, 2024 and sell it today you would earn a total of  5.00  from holding Liberty Northwest Bancorp or generate 0.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

GameStop Corp  vs.  Liberty Northwest Bancorp

GameStop Corp

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GameStop Corp are ranked lower than 12 (%) 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.

Liberty Northwest Bancorp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Liberty Northwest Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Liberty Northwest is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with GameStop Corp and Liberty Northwest

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

The idea behind GameStop Corp and Liberty Northwest Bancorp 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.