Correlation Between Joby Aviation and GameStop Corp

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

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

Diversification Opportunities for Joby Aviation and GameStop Corp

0.18

Correlation Coefficient

Joby Aviation  GameStop Corp

Average diversification

The 3 months correlation between Joby and GameStop is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Joby Aviation and GameStop Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GameStop Corp and Joby Aviation 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 Joby Aviation 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 Joby Aviation i.e., Joby Aviation and GameStop Corp go up and down completely randomly.

Pair Corralation between Joby Aviation and GameStop Corp

Given the investment horizon of 90 days Joby Aviation is expected to under-perform the GameStop Corp. But the stock apears to be less risky and, when comparing its historical volatility, Joby Aviation is 6.89 times less risky than GameStop Corp. The stock trades about -0.06 of its potential returns per unit of risk. The GameStop Corp is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  1,129  in GameStop Corp on February 27, 2024 and sell it today you would earn a total of  771.00  from holding GameStop Corp or generate 68.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Joby Aviation  vs.  GameStop Corp

Joby Aviation

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Joby Aviation has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's fundamental drivers remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

GameStop Corp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in GameStop Corp are ranked lower than 6 (%) 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 Joby Aviation and GameStop Corp

The main advantage of trading using opposite Joby Aviation and GameStop Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Joby Aviation 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 Joby Aviation 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.