Correlation Between GAMESTOP and TT Electronics
Can any of the company-specific risk be diversified away by investing in both GAMESTOP and TT Electronics 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 and TT Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GAMESTOP and TT Electronics PLC, you can compare the effects of market volatilities on GAMESTOP and TT Electronics 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 with a short position of TT Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of GAMESTOP and TT Electronics.
Diversification Opportunities for GAMESTOP and TT Electronics
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between GAMESTOP and 7TT is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding GAMESTOP and TT Electronics PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TT Electronics PLC and GAMESTOP 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 are associated (or correlated) with TT Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TT Electronics PLC has no effect on the direction of GAMESTOP i.e., GAMESTOP and TT Electronics go up and down completely randomly.
Pair Corralation between GAMESTOP and TT Electronics
Assuming the 90 days trading horizon GAMESTOP is expected to generate 5.83 times more return on investment than TT Electronics. However, GAMESTOP is 5.83 times more volatile than TT Electronics PLC. It trades about 0.22 of its potential returns per unit of risk. TT Electronics PLC is currently generating about 0.42 per unit of risk. If you would invest 1,005 in GAMESTOP on February 7, 2024 and sell it today you would earn a total of 565.00 from holding GAMESTOP or generate 56.22% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
GAMESTOP vs. TT Electronics PLC
Performance |
Timeline |
GAMESTOP |
TT Electronics PLC |
GAMESTOP and TT Electronics Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with GAMESTOP and TT Electronics
The main advantage of trading using opposite GAMESTOP and TT Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GAMESTOP position performs unexpectedly, TT Electronics 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 TT Electronics will offset losses from the drop in TT Electronics' long position.GAMESTOP vs. Penta Ocean Construction Co | GAMESTOP vs. VASCO DATA SEC | GAMESTOP vs. DOCDATA | GAMESTOP vs. Datadog |
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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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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