Correlation Between Vodka Brands and GameStop Corp

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

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

Diversification Opportunities for Vodka Brands and GameStop Corp

0.56

Correlation Coefficient

Vodka Brands  GameStop Corp

Very weak diversification

The 3 months correlation between Vodka and GameStop is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Vodka Brands Corp and GameStop Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GameStop Corp and Vodka Brands 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 Vodka Brands Corp are associated (or correlated) with GameStop Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GameStop Corp has no effect on the direction of Vodka Brands i.e., Vodka Brands and GameStop Corp go up and down completely randomly.

Pair Corralation between Vodka Brands and GameStop Corp

Given the investment horizon of 90 days Vodka Brands is expected to generate 2.15 times less return on investment than GameStop Corp. In addition to that, Vodka Brands is 1.02 times more volatile than GameStop Corp. It trades about 0.02 of its total potential returns per unit of risk. GameStop Corp is currently generating about 0.05 per unit of volatility. If you would invest  2,354  in GameStop Corp on September 30, 2024 and sell it today you would earn a total of  866.00  from holding GameStop Corp or generate 36.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.47%
Values	Daily Returns

Vodka Brands Corp  vs.  GameStop Corp

Vodka Brands Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vodka Brands Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong forward-looking signals, Vodka Brands is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

GameStop Corp

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GameStop Corp are ranked lower than 12 (%) 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.

Pair Trading with Vodka Brands and GameStop Corp

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

The idea behind Vodka Brands Corp and GameStop Corp 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.