Correlation Between GameStop Corp and Best Buy
Can any of the company-specific risk be diversified away by investing in both GameStop Corp and Best Buy 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 GameStop Corp and Best Buy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GameStop Corp and Best Buy Co, you can compare the effects of market volatilities on GameStop Corp and Best Buy 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 GameStop Corp with a short position of Best Buy. Check out your portfolio center. Please also check ongoing floating volatility patterns of GameStop Corp and Best Buy.
Diversification Opportunities for GameStop Corp and Best Buy
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between GameStop and Best is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding GameStop Corp and Best Buy Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Best Buy and GameStop Corp 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 GameStop Corp are associated (or correlated) with Best Buy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Best Buy has no effect on the direction of GameStop Corp i.e., GameStop Corp and Best Buy go up and down completely randomly.
Pair Corralation between GameStop Corp and Best Buy
Considering the 90-day investment horizon GameStop Corp is expected to under-perform the Best Buy. In addition to that, GameStop Corp is 3.06 times more volatile than Best Buy Co. It trades about -0.08 of its total potential returns per unit of risk. Best Buy Co is currently generating about 0.12 per unit of volatility. If you would invest 7,872 in Best Buy Co on December 30, 2023 and sell it today you would earn a total of 331.00 from holding Best Buy Co or generate 4.2% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
GameStop Corp vs. Best Buy Co
Performance |
Timeline |
GameStop Corp |
Best Buy |
GameStop Corp and Best Buy Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with GameStop Corp and Best Buy
The main advantage of trading using opposite GameStop Corp and Best Buy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GameStop Corp position performs unexpectedly, Best Buy 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 Best Buy will offset losses from the drop in Best Buy's long position.GameStop Corp vs. BBB Foods | GameStop Corp vs. Kite Realty Group | GameStop Corp vs. Simon Property Group | GameStop Corp vs. Cracker Barrel Old |
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Check out your portfolio center.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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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