Correlation Between Guild Esports and Allied Gaming

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

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

Diversification Opportunities for Guild Esports and Allied Gaming

-0.59

Correlation Coefficient

Guild Esports  Allied Gaming

Excellent diversification

The 3 months correlation between Guild and Allied is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Guild Esports Plc and Allied Gaming Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allied Gaming Entert and Guild Esports 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 Guild Esports Plc are associated (or correlated) with Allied Gaming. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allied Gaming Entert has no effect on the direction of Guild Esports i.e., Guild Esports and Allied Gaming go up and down completely randomly.

Pair Corralation between Guild Esports and Allied Gaming

If you would invest  0.27  in Guild Esports Plc on September 5, 2024 and sell it today you would lose (0.20) from holding Guild Esports Plc or give up 74.07% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	1.56%
Values	Daily Returns

Guild Esports Plc  vs.  Allied Gaming Entertainment

Guild Esports Plc

Risk-Adjusted Performance

4 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Guild Esports Plc are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, Guild Esports reported solid returns over the last few months and may actually be approaching a breakup point.

Allied Gaming Entert

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Allied Gaming Entertainment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable technical and fundamental indicators, Allied Gaming is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Guild Esports and Allied Gaming

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

The idea behind Guild Esports Plc and Allied Gaming Entertainment 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.