Correlation Between Live Ventures and GameStop Corp

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

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

Diversification Opportunities for Live Ventures and GameStop Corp

-0.7

Correlation Coefficient

Live Ventures  GameStop Corp

Excellent diversification

The 3 months correlation between Live and GameStop is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Live Ventures and GameStop Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GameStop Corp and Live Ventures 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 Live Ventures 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 Live Ventures i.e., Live Ventures and GameStop Corp go up and down completely randomly.

Pair Corralation between Live Ventures and GameStop Corp

Given the investment horizon of 90 days Live Ventures is expected to generate 0.82 times more return on investment than GameStop Corp. However, Live Ventures is 1.21 times less risky than GameStop Corp. It trades about 0.01 of its potential returns per unit of risk. GameStop Corp is currently generating about -0.06 per unit of risk. If you would invest  951.00  in Live Ventures on October 20, 2024 and sell it today you would lose (1.00) from holding Live Ventures or give up 0.11% of portfolio value over 90 days.

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

Live Ventures  vs.  GameStop Corp

Live Ventures

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Live Ventures has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

GameStop Corp

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in GameStop Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent primary indicators, GameStop Corp exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Live Ventures and GameStop Corp

The main advantage of trading using opposite Live Ventures and GameStop Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Live Ventures 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 Live Ventures 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.

Check out your portfolio center.

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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.