Correlation Between TRUIST and GameStop Corp

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

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

Diversification Opportunities for TRUIST and GameStop Corp

-0.17

Correlation Coefficient

TRUIST  GameStop Corp

Good diversification

The 3 months correlation between TRUIST and GameStop is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding TRUIST FINANCIAL P and GameStop Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GameStop Corp and TRUIST 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 TRUIST FINANCIAL P 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 TRUIST i.e., TRUIST and GameStop Corp go up and down completely randomly.

Pair Corralation between TRUIST and GameStop Corp

Assuming the 90 days trading horizon TRUIST is expected to generate 2.29 times less return on investment than GameStop Corp. But when comparing it to its historical volatility, TRUIST FINANCIAL P is 30.75 times less risky than GameStop Corp. It trades about 0.12 of its potential returns per unit of risk. GameStop Corp is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  2,757  in GameStop Corp on November 19, 2024 and sell it today you would lose (57.00) from holding GameStop Corp or give up 2.07% of portfolio value over 90 days.

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

TRUIST FINANCIAL P  vs.  GameStop Corp

TRUIST FINANCIAL P

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in TRUIST FINANCIAL P are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, TRUIST is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

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 rather sound primary indicators, GameStop Corp is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with TRUIST and GameStop Corp

The main advantage of trading using opposite TRUIST and GameStop Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TRUIST 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 TRUIST FINANCIAL P 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.