Correlation Between GameStop Corp and FREEPORT

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

By analyzing existing cross correlation between GameStop Corp and FREEPORT MCMORAN INC 525, you can compare the effects of market volatilities on GameStop Corp and FREEPORT 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 FREEPORT. Check out your portfolio center. Please also check ongoing floating volatility patterns of GameStop Corp and FREEPORT.

Diversification Opportunities for GameStop Corp and FREEPORT

-0.1

Correlation Coefficient

GameStop Corp  FREEPORT

Good diversification

The 3 months correlation between GameStop and FREEPORT is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding GameStop Corp and FREEPORT MCMORAN INC 525 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FREEPORT MCMORAN INC 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 FREEPORT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FREEPORT MCMORAN INC has no effect on the direction of GameStop Corp i.e., GameStop Corp and FREEPORT go up and down completely randomly.

Pair Corralation between GameStop Corp and FREEPORT

Considering the 90-day investment horizon GameStop Corp is expected to generate 15.0 times more return on investment than FREEPORT. However, GameStop Corp is 15.0 times more volatile than FREEPORT MCMORAN INC 525. It trades about 0.07 of its potential returns per unit of risk. FREEPORT MCMORAN INC 525 is currently generating about -0.01 per unit of risk. If you would invest  1,667  in GameStop Corp on September 25, 2024 and sell it today you would earn a total of  1,449  from holding GameStop Corp or generate 86.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.19%
Values	Daily Returns

GameStop Corp  vs.  FREEPORT MCMORAN INC 525

GameStop Corp

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GameStop Corp are ranked lower than 11 (%) 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.

FREEPORT MCMORAN INC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FREEPORT MCMORAN INC 525 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, FREEPORT is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with GameStop Corp and FREEPORT

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

The idea behind GameStop Corp and FREEPORT MCMORAN INC 525 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.