Correlation Between GameStop Corp and Welltower

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

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

Diversification Opportunities for GameStop Corp and Welltower

-0.74

Correlation Coefficient

GameStop Corp  Welltower

Pay attention - limited upside

The 3 months correlation between GameStop and Welltower is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding GameStop Corp and Welltower in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Welltower 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 Welltower. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Welltower has no effect on the direction of GameStop Corp i.e., GameStop Corp and Welltower go up and down completely randomly.

Pair Corralation between GameStop Corp and Welltower

Assuming the 90 days trading horizon GameStop Corp is expected to generate 6.07 times more return on investment than Welltower. However, GameStop Corp is 6.07 times more volatile than Welltower. It trades about 0.04 of its potential returns per unit of risk. Welltower is currently generating about 0.15 per unit of risk. If you would invest  2,032  in GameStop Corp on December 4, 2024 and sell it today you would earn a total of  344.00  from holding GameStop Corp or generate 16.93% return on investment over 90 days.

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

GameStop Corp  vs.  Welltower

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. Despite nearly stable basic indicators, GameStop Corp is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Welltower

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Welltower are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Welltower reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GameStop Corp and Welltower

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

The idea behind GameStop Corp and Welltower 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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.