Correlation Between GameStop Corp and Polaris

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

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

Diversification Opportunities for GameStop Corp and Polaris

-0.7

Correlation Coefficient

GameStop Corp  Polaris

Excellent diversification

The 3 months correlation between GameStop and Polaris is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding GameStop Corp and Polaris in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Polaris 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 Polaris. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Polaris has no effect on the direction of GameStop Corp i.e., GameStop Corp and Polaris go up and down completely randomly.

Pair Corralation between GameStop Corp and Polaris

Assuming the 90 days trading horizon GameStop Corp is expected to under-perform the Polaris. In addition to that, GameStop Corp is 17.12 times more volatile than Polaris. It trades about -0.05 of its total potential returns per unit of risk. Polaris is currently generating about 0.13 per unit of volatility. If you would invest  68,813  in Polaris on April 23, 2025 and sell it today you would earn a total of  1,287  from holding Polaris or generate 1.87% return on investment over 90 days.

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

GameStop Corp  vs.  Polaris

GameStop Corp

Risk-Adjusted Performance

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 latest weak performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Polaris

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Polaris are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong forward indicators, Polaris is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with GameStop Corp and Polaris

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

The idea behind GameStop Corp and Polaris 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.