Correlation Between Topbuild Corp and Corsair Gaming

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

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

Diversification Opportunities for Topbuild Corp and Corsair Gaming

-0.04

Correlation Coefficient

Topbuild Corp  Corsair Gaming

Good diversification

The 3 months correlation between Topbuild and Corsair is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Topbuild Corp and Corsair Gaming in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Corsair Gaming and Topbuild 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 Topbuild Corp are associated (or correlated) with Corsair Gaming. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Corsair Gaming has no effect on the direction of Topbuild Corp i.e., Topbuild Corp and Corsair Gaming go up and down completely randomly.

Pair Corralation between Topbuild Corp and Corsair Gaming

Considering the 90-day investment horizon Topbuild Corp is expected to under-perform the Corsair Gaming. But the stock apears to be less risky and, when comparing its historical volatility, Topbuild Corp is 1.28 times less risky than Corsair Gaming. The stock trades about -0.07 of its potential returns per unit of risk. The Corsair Gaming is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  652.00  in Corsair Gaming on September 16, 2024 and sell it today you would earn a total of  74.00  from holding Corsair Gaming or generate 11.35% return on investment over 90 days.

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

Topbuild Corp  vs.  Corsair Gaming

Topbuild Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Topbuild Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's essential indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Corsair Gaming

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Corsair Gaming are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile basic indicators, Corsair Gaming reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Topbuild Corp and Corsair Gaming

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

The idea behind Topbuild Corp and Corsair 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.

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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.