Correlation Between Ralph Lauren and Champion Gaming

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

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

Diversification Opportunities for Ralph Lauren and Champion Gaming

0.0

Correlation Coefficient

Ralph Lauren  Champion Gaming

Pay attention - limited upside

The 3 months correlation between Ralph and Champion is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Ralph Lauren Corp and Champion Gaming Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Champion Gaming Group and Ralph Lauren 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 Ralph Lauren Corp are associated (or correlated) with Champion Gaming. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Champion Gaming Group has no effect on the direction of Ralph Lauren i.e., Ralph Lauren and Champion Gaming go up and down completely randomly.

Pair Corralation between Ralph Lauren and Champion Gaming

Allowing for the 90-day total investment horizon Ralph Lauren is expected to generate 1.2 times less return on investment than Champion Gaming. But when comparing it to its historical volatility, Ralph Lauren Corp is 4.08 times less risky than Champion Gaming. It trades about 0.09 of its potential returns per unit of risk. Champion Gaming Group is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  5.82  in Champion Gaming Group on October 10, 2024 and sell it today you would lose (0.82) from holding Champion Gaming Group or give up 14.09% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Ralph Lauren Corp  vs.  Champion Gaming Group

Ralph Lauren Corp

Risk-Adjusted Performance

14 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Ralph Lauren Corp are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating essential indicators, Ralph Lauren disclosed solid returns over the last few months and may actually be approaching a breakup point.

Champion Gaming Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Champion Gaming Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Champion Gaming is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Ralph Lauren and Champion Gaming

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

The idea behind Ralph Lauren Corp and Champion Gaming 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.