Correlation Between GameStop Corp and Phillips

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

By analyzing existing cross correlation between GameStop Corp and Phillips 66, you can compare the effects of market volatilities on GameStop Corp and Phillips 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 Phillips. Check out your portfolio center. Please also check ongoing floating volatility patterns of GameStop Corp and Phillips.

Diversification Opportunities for GameStop Corp and Phillips

-0.05

Correlation Coefficient

GameStop Corp  Phillips

Good diversification

The 3 months correlation between GameStop and Phillips is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding GameStop Corp and Phillips 66 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Phillips 66 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 Phillips. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Phillips 66 has no effect on the direction of GameStop Corp i.e., GameStop Corp and Phillips go up and down completely randomly.

Pair Corralation between GameStop Corp and Phillips

Assuming the 90 days trading horizon GameStop Corp is expected to generate 2.17 times more return on investment than Phillips. However, GameStop Corp is 2.17 times more volatile than Phillips 66. It trades about 0.08 of its potential returns per unit of risk. Phillips 66 is currently generating about -0.05 per unit of risk. If you would invest  2,268  in GameStop Corp on October 4, 2024 and sell it today you would earn a total of  773.00  from holding GameStop Corp or generate 34.08% return on investment over 90 days.

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

GameStop Corp  vs.  Phillips 66

GameStop Corp

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in GameStop Corp are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, GameStop Corp reported solid returns over the last few months and may actually be approaching a breakup point.

Phillips 66

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Phillips 66 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with GameStop Corp and Phillips

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

The idea behind GameStop Corp and Phillips 66 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.