Correlation Between OverActive Media and Guild Esports

Can any of the company-specific risk be diversified away by investing in both OverActive Media and Guild Esports 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 OverActive Media and Guild Esports into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for OverActive Media and Guild Esports

-0.05

Correlation Coefficient

OverActive Media  Guild Esports

Good diversification

The 3 months correlation between OverActive and Guild is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding OverActive Media Corp and Guild Esports Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guild Esports Plc and OverActive Media 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 OverActive Media Corp are associated (or correlated) with Guild Esports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guild Esports Plc has no effect on the direction of OverActive Media i.e., OverActive Media and Guild Esports go up and down completely randomly.

Pair Corralation between OverActive Media and Guild Esports

If you would invest  0.27  in Guild Esports Plc on February 7, 2024 and sell it today you would earn a total of  0.00  from holding Guild Esports Plc or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

OverActive Media Corp  vs.  Guild Esports Plc

OverActive Media Corp

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in OverActive Media Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, OverActive Media reported solid returns over the last few months and may actually be approaching a breakup point.

Guild Esports Plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Guild Esports Plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's fundamental indicators remain nearly stable which may send shares a bit higher in June 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with OverActive Media and Guild Esports

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

The idea behind OverActive Media Corp and Guild Esports Plc 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.

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 the Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.