Correlation Between GameStop Corp and Telefnica

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

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

Diversification Opportunities for GameStop Corp and Telefnica

-0.45

Correlation Coefficient

GameStop Corp  Telefnica

Very good diversification

The 3 months correlation between GameStop and Telefnica is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding GameStop Corp and Telefnica SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telefnica SA 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 Telefnica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telefnica SA has no effect on the direction of GameStop Corp i.e., GameStop Corp and Telefnica go up and down completely randomly.

Pair Corralation between GameStop Corp and Telefnica

Assuming the 90 days trading horizon GameStop Corp is expected to under-perform the Telefnica. In addition to that, GameStop Corp is 4.41 times more volatile than Telefnica SA. It trades about -0.05 of its total potential returns per unit of risk. Telefnica SA is currently generating about 0.19 per unit of volatility. If you would invest  8,700  in Telefnica SA on April 20, 2025 and sell it today you would earn a total of  1,012  from holding Telefnica SA or generate 11.63% 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.  Telefnica SA

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 unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in August 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Telefnica SA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Telefnica SA are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Telefnica may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with GameStop Corp and Telefnica

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

The idea behind GameStop Corp and Telefnica SA 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.