Correlation Between GameStop Corp and RH

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

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

Diversification Opportunities for GameStop Corp and RH

0.68

Correlation Coefficient

GameStop Corp  RH

Poor diversification

The 3 months correlation between GameStop and RH is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding GameStop Corp and RH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RH 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 RH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RH has no effect on the direction of GameStop Corp i.e., GameStop Corp and RH go up and down completely randomly.

Pair Corralation between GameStop Corp and RH

Considering the 90-day investment horizon GameStop Corp is expected to generate 0.97 times more return on investment than RH. However, GameStop Corp is 1.03 times less risky than RH. It trades about -0.04 of its potential returns per unit of risk. RH is currently generating about -0.21 per unit of risk. If you would invest  3,220  in GameStop Corp on December 27, 2024 and sell it today you would lose (384.00) from holding GameStop Corp or give up 11.93% of portfolio value over 90 days.

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

GameStop Corp  vs.  RH

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 latest inconsistent performance, the Stock's primary indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

RH

Risk-Adjusted Performance

Very Weak

Over the last 90 days RH has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's technical indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with GameStop Corp and RH

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

The idea behind GameStop Corp and RH 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 CEOs Directory module to screen CEOs from public companies around the world.