Correlation Between GameStop Corp and HireRight Holdings

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

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

Diversification Opportunities for GameStop Corp and HireRight Holdings

-0.43

Correlation Coefficient

GameStop Corp  HireRight Holdings

Very good diversification

The 3 months correlation between GameStop and HireRight is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding GameStop Corp and HireRight Holdings Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HireRight Holdings Corp 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 HireRight Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HireRight Holdings Corp has no effect on the direction of GameStop Corp i.e., GameStop Corp and HireRight Holdings go up and down completely randomly.

Pair Corralation between GameStop Corp and HireRight Holdings

Considering the 90-day investment horizon GameStop Corp is expected to under-perform the HireRight Holdings. In addition to that, GameStop Corp is 2.95 times more volatile than HireRight Holdings Corp. It trades about -0.11 of its total potential returns per unit of risk. HireRight Holdings Corp is currently generating about 0.15 per unit of volatility. If you would invest  1,264  in HireRight Holdings Corp on January 24, 2024 and sell it today you would earn a total of  168.00  from holding HireRight Holdings Corp or generate 13.29% return on investment over 90 days.

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

GameStop Corp  vs.  HireRight Holdings Corp

GameStop Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GameStop Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's primary indicators remain rather sound which may send shares a bit higher in May 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

HireRight Holdings Corp

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in HireRight Holdings Corp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, HireRight Holdings unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GameStop Corp and HireRight Holdings

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

The idea behind GameStop Corp and HireRight Holdings 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.