Correlation Between John Wiley and GameStop Corp

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

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

Diversification Opportunities for John Wiley and GameStop Corp

0.26

Correlation Coefficient

John Wiley  GameStop Corp

Modest diversification

The 3 months correlation between John and GameStop is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding John Wiley Sons and GameStop Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GameStop Corp and John Wiley 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 John Wiley Sons 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 John Wiley i.e., John Wiley and GameStop Corp go up and down completely randomly.

Pair Corralation between John Wiley and GameStop Corp

Given the investment horizon of 90 days John Wiley Sons is expected to generate 47.57 times more return on investment than GameStop Corp. However, John Wiley is 47.57 times more volatile than GameStop Corp. It trades about 0.16 of its potential returns per unit of risk. GameStop Corp is currently generating about 0.05 per unit of risk. If you would invest  3,875  in John Wiley Sons on September 14, 2024 and sell it today you would earn a total of  801.00  from holding John Wiley Sons or generate 20.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	78.4%
Values	Daily Returns

John Wiley Sons  vs.  GameStop Corp

John Wiley Sons

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in John Wiley Sons are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, John Wiley is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

GameStop Corp

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GameStop Corp are ranked lower than 13 (%) 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 John Wiley and GameStop Corp

The main advantage of trading using opposite John Wiley and GameStop Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if John Wiley 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 John Wiley Sons 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.