Correlation Between Sable Offshore and GameStop Corp

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

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

Diversification Opportunities for Sable Offshore and GameStop Corp

-0.09

Correlation Coefficient

Sable Offshore  GameStop Corp

Good diversification

The 3 months correlation between Sable and GameStop is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Sable Offshore Corp and GameStop Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GameStop Corp and Sable Offshore 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 Sable Offshore Corp 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 Sable Offshore i.e., Sable Offshore and GameStop Corp go up and down completely randomly.

Pair Corralation between Sable Offshore and GameStop Corp

Considering the 90-day investment horizon Sable Offshore is expected to generate 1.8 times less return on investment than GameStop Corp. But when comparing it to its historical volatility, Sable Offshore Corp is 2.37 times less risky than GameStop Corp. It trades about 0.06 of its potential returns per unit of risk. GameStop Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,833  in GameStop Corp on September 19, 2024 and sell it today you would earn a total of  1,022  from holding GameStop Corp or generate 55.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.56%
Values	Daily Returns

Sable Offshore Corp  vs.  GameStop Corp

Sable Offshore Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sable Offshore Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

GameStop Corp

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in GameStop Corp are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain primary indicators, GameStop Corp exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sable Offshore and GameStop Corp

The main advantage of trading using opposite Sable Offshore and GameStop Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sable Offshore 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 Sable Offshore Corp 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.