Correlation Between GameStop Corp and Roblox Corp

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

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

Diversification Opportunities for GameStop Corp and Roblox Corp

0.72

Correlation Coefficient

GameStop Corp  Roblox Corp

Poor diversification

The 3 months correlation between GameStop and Roblox is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding GameStop Corp and Roblox Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Roblox Corp 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 Roblox Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Roblox Corp has no effect on the direction of GameStop Corp i.e., GameStop Corp and Roblox Corp go up and down completely randomly.

Pair Corralation between GameStop Corp and Roblox Corp

Considering the 90-day investment horizon GameStop Corp is expected to generate 1.82 times more return on investment than Roblox Corp. However, GameStop Corp is 1.82 times more volatile than Roblox Corp. It trades about 0.18 of its potential returns per unit of risk. Roblox Corp is currently generating about 0.15 per unit of risk. If you would invest  2,793  in GameStop Corp on October 8, 2024 and sell it today you would earn a total of  372.00  from holding GameStop Corp or generate 13.32% return on investment over 90 days.

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

GameStop Corp  vs.  Roblox Corp

GameStop Corp

Risk-Adjusted Performance

16 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GameStop Corp are ranked lower than 16 (%) 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.

Roblox Corp

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Roblox Corp are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak essential indicators, Roblox Corp showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GameStop Corp and Roblox Corp

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

The idea behind GameStop Corp and Roblox 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.