Correlation Between Motorsport Gaming and GameSquare Holdings

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

By analyzing existing cross correlation between Motorsport Gaming Us and GameSquare Holdings, you can compare the effects of market volatilities on Motorsport Gaming and GameSquare Holdings 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 Motorsport Gaming with a short position of GameSquare Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Motorsport Gaming and GameSquare Holdings.

Diversification Opportunities for Motorsport Gaming and GameSquare Holdings

-0.42

Correlation Coefficient

Motorsport Gaming  GameSquare Holdings

Very good diversification

The 3 months correlation between Motorsport and GameSquare is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Motorsport Gaming Us and GameSquare Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GameSquare Holdings and Motorsport Gaming 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 Motorsport Gaming Us are associated (or correlated) with GameSquare Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GameSquare Holdings has no effect on the direction of Motorsport Gaming i.e., Motorsport Gaming and GameSquare Holdings go up and down completely randomly.

Pair Corralation between Motorsport Gaming and GameSquare Holdings

Given the investment horizon of 90 days Motorsport Gaming Us is expected to generate 1.02 times more return on investment than GameSquare Holdings. However, Motorsport Gaming is 1.02 times more volatile than GameSquare Holdings. It trades about 0.03 of its potential returns per unit of risk. GameSquare Holdings is currently generating about 0.01 per unit of risk. If you would invest  131.00  in Motorsport Gaming Us on September 3, 2024 and sell it today you would earn a total of  1.00  from holding Motorsport Gaming Us or generate 0.76% return on investment over 90 days.

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

Motorsport Gaming Us  vs.  GameSquare Holdings

Motorsport Gaming

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Motorsport Gaming Us are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very weak technical and fundamental indicators, Motorsport Gaming displayed solid returns over the last few months and may actually be approaching a breakup point.

GameSquare Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GameSquare Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound primary indicators, GameSquare Holdings is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Motorsport Gaming and GameSquare Holdings

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

The idea behind Motorsport Gaming Us and GameSquare Holdings 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.