Correlation Between Investment and GameStop Corp

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

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

Diversification Opportunities for Investment and GameStop Corp

-0.43

Correlation Coefficient

Investment  GameStop Corp

Very good diversification

The 3 months correlation between Investment and GameStop is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Investment AB Latour and GameStop Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GameStop Corp and Investment 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 Investment AB Latour are associated (or correlated) with GameStop Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GameStop Corp has no effect on the direction of Investment i.e., Investment and GameStop Corp go up and down completely randomly.

Pair Corralation between Investment and GameStop Corp

Assuming the 90 days horizon Investment AB Latour is expected to generate 0.64 times more return on investment than GameStop Corp. However, Investment AB Latour is 1.55 times less risky than GameStop Corp. It trades about 0.08 of its potential returns per unit of risk. GameStop Corp is currently generating about -0.1 per unit of risk. If you would invest  2,456  in Investment AB Latour on December 21, 2024 and sell it today you would earn a total of  213.00  from holding Investment AB Latour or generate 8.67% return on investment over 90 days.

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

Investment AB Latour  vs.  GameStop Corp

Investment AB Latour

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Investment AB Latour are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain fundamental drivers, Investment may actually be approaching a critical reversion point that can send shares even higher in April 2025.

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. In spite of inconsistent performance in the last few months, the Stock's primary indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Investment and GameStop Corp

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

The idea behind Investment AB Latour and GameStop Corp 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.