Correlation Between GameStop Corp and Gold Road
Can any of the company-specific risk be diversified away by investing in both GameStop Corp and Gold Road 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 Gold Road into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GameStop Corp and Gold Road Resources, you can compare the effects of market volatilities on GameStop Corp and Gold Road 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 Gold Road. Check out your portfolio center. Please also check ongoing floating volatility patterns of GameStop Corp and Gold Road.
Diversification Opportunities for GameStop Corp and Gold Road
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between GameStop and Gold is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding GameStop Corp and Gold Road Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gold Road Resources 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 Gold Road. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gold Road Resources has no effect on the direction of GameStop Corp i.e., GameStop Corp and Gold Road go up and down completely randomly.
Pair Corralation between GameStop Corp and Gold Road
Assuming the 90 days trading horizon GameStop Corp is expected to generate 1.78 times more return on investment than Gold Road. However, GameStop Corp is 1.78 times more volatile than Gold Road Resources. It trades about 0.27 of its potential returns per unit of risk. Gold Road Resources is currently generating about -0.01 per unit of risk. If you would invest 2,587 in GameStop Corp on October 4, 2024 and sell it today you would earn a total of 454.00 from holding GameStop Corp or generate 17.55% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
GameStop Corp vs. Gold Road Resources
Performance |
Timeline |
GameStop Corp |
Gold Road Resources |
GameStop Corp and Gold Road Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with GameStop Corp and Gold Road
The main advantage of trading using opposite GameStop Corp and Gold Road positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GameStop Corp position performs unexpectedly, Gold Road 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 Gold Road will offset losses from the drop in Gold Road's long position.GameStop Corp vs. MGIC INVESTMENT | GameStop Corp vs. Gol Intelligent Airlines | GameStop Corp vs. CDL INVESTMENT | GameStop Corp vs. Southwest Airlines Co |
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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.
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