Correlation Between Guild Esports and Pop Culture

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

By analyzing existing cross correlation between Guild Esports Plc and Pop Culture Group, you can compare the effects of market volatilities on Guild Esports and Pop Culture 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 Guild Esports with a short position of Pop Culture. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guild Esports and Pop Culture.

Diversification Opportunities for Guild Esports and Pop Culture

0.02

Correlation Coefficient

Guild Esports  Pop Culture

Significant diversification

The 3 months correlation between Guild and Pop is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Guild Esports Plc and Pop Culture Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pop Culture Group and Guild Esports 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 Guild Esports Plc are associated (or correlated) with Pop Culture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pop Culture Group has no effect on the direction of Guild Esports i.e., Guild Esports and Pop Culture go up and down completely randomly.

Pair Corralation between Guild Esports and Pop Culture

Assuming the 90 days horizon Guild Esports Plc is expected to generate 16.28 times more return on investment than Pop Culture. However, Guild Esports is 16.28 times more volatile than Pop Culture Group. It trades about 0.15 of its potential returns per unit of risk. Pop Culture Group is currently generating about -0.04 per unit of risk. If you would invest  0.07  in Guild Esports Plc on December 18, 2024 and sell it today you would lose (0.06) from holding Guild Esports Plc or give up 85.71% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	96.72%
Values	Daily Returns

Guild Esports Plc  vs.  Pop Culture Group

Guild Esports Plc

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Guild Esports Plc are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, Guild Esports reported solid returns over the last few months and may actually be approaching a breakup point.

Pop Culture Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pop Culture Group has generated negative risk-adjusted returns adding no value to investors with long positions. Even with abnormal performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Guild Esports and Pop Culture

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

The idea behind Guild Esports Plc and Pop Culture Group 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.