Correlation Between GAMESTOP and Levi Strauss

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

By analyzing existing cross correlation between GAMESTOP and Levi Strauss Co, you can compare the effects of market volatilities on GAMESTOP and Levi Strauss 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 with a short position of Levi Strauss. Check out your portfolio center. Please also check ongoing floating volatility patterns of GAMESTOP and Levi Strauss.

Diversification Opportunities for GAMESTOP and Levi Strauss

0.44

Correlation Coefficient

GAMESTOP  Levi Strauss

Very weak diversification

The 3 months correlation between GAMESTOP and Levi is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding GAMESTOP and Levi Strauss Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Levi Strauss and GAMESTOP 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 are associated (or correlated) with Levi Strauss. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Levi Strauss has no effect on the direction of GAMESTOP i.e., GAMESTOP and Levi Strauss go up and down completely randomly.

Pair Corralation between GAMESTOP and Levi Strauss

Assuming the 90 days trading horizon GAMESTOP is expected to under-perform the Levi Strauss. In addition to that, GAMESTOP is 2.77 times more volatile than Levi Strauss Co. It trades about -0.2 of its total potential returns per unit of risk. Levi Strauss Co is currently generating about 0.05 per unit of volatility. If you would invest  1,678  in Levi Strauss Co on October 23, 2024 and sell it today you would earn a total of  14.00  from holding Levi Strauss Co or generate 0.83% return on investment over 90 days.

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

GAMESTOP  vs.  Levi Strauss Co

GAMESTOP

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GAMESTOP are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, GAMESTOP unveiled solid returns over the last few months and may actually be approaching a breakup point.

Levi Strauss

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Levi Strauss Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Levi Strauss is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with GAMESTOP and Levi Strauss

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

The idea behind GAMESTOP and Levi Strauss Co 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.