Correlation Between GameStop Corp and Sharplink Gaming

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

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

Diversification Opportunities for GameStop Corp and Sharplink Gaming

-0.26

Correlation Coefficient

GameStop Corp  Sharplink Gaming

Very good diversification

The 3 months correlation between GameStop and Sharplink is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding GameStop Corp and Sharplink Gaming in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sharplink Gaming 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 Sharplink Gaming. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sharplink Gaming has no effect on the direction of GameStop Corp i.e., GameStop Corp and Sharplink Gaming go up and down completely randomly.

Pair Corralation between GameStop Corp and Sharplink Gaming

Considering the 90-day investment horizon GameStop Corp is expected to generate 0.91 times more return on investment than Sharplink Gaming. However, GameStop Corp is 1.09 times less risky than Sharplink Gaming. It trades about 0.02 of its potential returns per unit of risk. Sharplink Gaming is currently generating about -0.04 per unit of risk. If you would invest  3,398  in GameStop Corp on February 13, 2024 and sell it today you would lose (353.00) from holding GameStop Corp or give up 10.39% of portfolio value over 90 days.

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

GameStop Corp  vs.  Sharplink Gaming

GameStop Corp

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GameStop Corp are ranked lower than 11 (%) 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.

Sharplink Gaming

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sharplink Gaming has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in June 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with GameStop Corp and Sharplink Gaming

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

The idea behind GameStop Corp and Sharplink Gaming 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.