Correlation Between Gamestop Corp and Sirius XM

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Can any of the company-specific risk be diversified away by investing in both Gamestop Corp and Sirius XM 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 Sirius XM into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gamestop Corp and Sirius XM Holdings, you can compare the effects of market volatilities on Gamestop Corp and Sirius XM 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 Sirius XM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gamestop Corp and Sirius XM.

Diversification Opportunities for Gamestop Corp and Sirius XM

0.89
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Gamestop and Sirius is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Gamestop Corp and Sirius XM Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sirius XM Holdings 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 Sirius XM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sirius XM Holdings has no effect on the direction of Gamestop Corp i.e., Gamestop Corp and Sirius XM go up and down completely randomly.

Pair Corralation between Gamestop Corp and Sirius XM

Considering the 90-day investment horizon Gamestop Corp is expected to generate 2.85 times more return on investment than Sirius XM. However, Gamestop Corp is 2.85 times more volatile than Sirius XM Holdings. It trades about 0.03 of its potential returns per unit of risk. Sirius XM Holdings is currently generating about -0.06 per unit of risk. If you would invest  2,514  in Gamestop Corp on July 6, 2022 and sell it today you would earn a total of  24.00  from holding Gamestop Corp or generate 0.95% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy95.24%
ValuesDaily Returns

Gamestop Corp  vs.  Sirius XM Holdings

 Performance (%) 
       Timeline  
Gamestop Corp 
Gamestop Performance
0 of 100
Over the last 90 days Gamestop Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's primary indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Gamestop Price Channel

Sirius XM Holdings 
Sirius Performance
0 of 100
Over the last 90 days Sirius XM Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Sirius XM is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Sirius Price Channel

Gamestop Corp and Sirius XM Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Gamestop Corp and Sirius XM

The main advantage of trading using opposite Gamestop Corp and Sirius XM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gamestop Corp position performs unexpectedly, Sirius XM 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 Sirius XM will offset losses from the drop in Sirius XM's long position.
Gamestop Corp vs. Best Buy Company
The idea behind Gamestop Corp and Sirius XM Holdings 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.
Sirius XM vs. Live Nation Entertainment
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.

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