Correlation Between GameStop Corp and Brandywine Realty

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

By analyzing existing cross correlation between GameStop Corp and Brandywine Realty Trust, you can compare the effects of market volatilities on GameStop Corp and Brandywine Realty 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 Brandywine Realty. Check out your portfolio center. Please also check ongoing floating volatility patterns of GameStop Corp and Brandywine Realty.

Diversification Opportunities for GameStop Corp and Brandywine Realty

-0.07

Correlation Coefficient

GameStop Corp  Brandywine Realty

Good diversification

The 3 months correlation between GameStop and Brandywine is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding GameStop Corp and Brandywine Realty Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brandywine Realty Trust 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 Brandywine Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brandywine Realty Trust has no effect on the direction of GameStop Corp i.e., GameStop Corp and Brandywine Realty go up and down completely randomly.

Pair Corralation between GameStop Corp and Brandywine Realty

Considering the 90-day investment horizon GameStop Corp is expected to generate 1.31 times more return on investment than Brandywine Realty. However, GameStop Corp is 1.31 times more volatile than Brandywine Realty Trust. It trades about 0.19 of its potential returns per unit of risk. Brandywine Realty Trust is currently generating about 0.02 per unit of risk. If you would invest  2,197  in GameStop Corp on October 1, 2024 and sell it today you would earn a total of  1,023  from holding GameStop Corp or generate 46.56% return on investment over 90 days.

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

GameStop Corp  vs.  Brandywine Realty Trust

GameStop Corp

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GameStop Corp are ranked lower than 14 (%) 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.

Brandywine Realty Trust

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Brandywine Realty Trust are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, Brandywine Realty is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with GameStop Corp and Brandywine Realty

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

The idea behind GameStop Corp and Brandywine Realty Trust 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.