Correlation Between Victory Square and GameSquare Holdings

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

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

Diversification Opportunities for Victory Square and GameSquare Holdings

0.44

Correlation Coefficient

Victory Square  GameSquare Holdings

Very weak diversification

The 3 months correlation between Victory and GameSquare is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Victory Square Technologies and GameSquare Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GameSquare Holdings and Victory Square 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 Victory Square Technologies 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 Victory Square i.e., Victory Square and GameSquare Holdings go up and down completely randomly.

Pair Corralation between Victory Square and GameSquare Holdings

Assuming the 90 days horizon Victory Square Technologies is expected to generate 0.96 times more return on investment than GameSquare Holdings. However, Victory Square Technologies is 1.05 times less risky than GameSquare Holdings. It trades about 0.15 of its potential returns per unit of risk. GameSquare Holdings is currently generating about 0.04 per unit of risk. If you would invest  6.81  in Victory Square Technologies on September 14, 2024 and sell it today you would earn a total of  4.19  from holding Victory Square Technologies or generate 61.53% return on investment over 90 days.

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

Victory Square Technologies  vs.  GameSquare Holdings

Victory Square Techn

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Victory Square Technologies are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Victory Square reported solid returns over the last few months and may actually be approaching a breakup point.

GameSquare Holdings

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in GameSquare Holdings are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent primary indicators, GameSquare Holdings exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Victory Square and GameSquare Holdings

The main advantage of trading using opposite Victory Square and GameSquare Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Victory Square 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 Victory Square Technologies 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.