Correlation Between Guild Esports and Fox Corp

Can any of the company-specific risk be diversified away by investing in both Guild Esports and Fox Corp 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 Fox Corp 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 Fox Corp Class, you can compare the effects of market volatilities on Guild Esports and Fox Corp 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 Fox Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guild Esports and Fox Corp.

Diversification Opportunities for Guild Esports and Fox Corp

0.87

Correlation Coefficient

Guild Esports  Fox Corp

Very poor diversification

The 3 months correlation between Guild and Fox is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Guild Esports Plc and Fox Corp Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fox Corp Class 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 Fox Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fox Corp Class has no effect on the direction of Guild Esports i.e., Guild Esports and Fox Corp go up and down completely randomly.

Pair Corralation between Guild Esports and Fox Corp

Assuming the 90 days horizon Guild Esports Plc is expected to generate 17.61 times more return on investment than Fox Corp. However, Guild Esports is 17.61 times more volatile than Fox Corp Class. It trades about 0.12 of its potential returns per unit of risk. Fox Corp Class is currently generating about 0.18 per unit of risk. If you would invest  0.27  in Guild Esports Plc on September 3, 2024 and sell it today you would earn a total of  0.50  from holding Guild Esports Plc or generate 185.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.46%
Values	Daily Returns

Guild Esports Plc  vs.  Fox Corp Class

Guild Esports Plc

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Guild Esports Plc are ranked lower than 9 (%) 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.

Fox Corp Class

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fox Corp Class are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Fox Corp sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Guild Esports and Fox Corp

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

The idea behind Guild Esports Plc and Fox Corp Class 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.