Before I start, I just want to say I am writing this because last time I put up speculative DD, and people were tearing it apart because it was very generalized. Being that I have a scientific background I decided to put the time in to gather all the information and analyze it with statistics before posting this one. I hope some of you find it meaningful and I would appreciate any genuine feedback or constructive criticism!
Hypothesis: GME is responsible for the previous two market dips and has the ability to significantly move the direction of the entire market.
New York Stock Exchange (NYA), Market Cap ($22.9 trillion), 2400 stock listings
Nasdaq (IXIC), Market Cap (??), 3300+ listings + S&P 500(MC: $31.61 trillion).
Dow Jones Industrial Average (DJIA), Market Cap ($8.33 trillion), 30 largest of (NYA and Nasdaq)
TLDR;/Abstract: I compare the relationship between GME, and the world's largest market indices mentioned above using a bunch of historical YTD quotes. The data suggests that there is a statistically significant correlation between GME and both the NYA and DJIA. The data didn’t suggest that there is a significant relationship between IXIC and GME, but the data suggests you might be able to infer that there is actually a significant relationship. As GME rises the market responds by dropping. Based on this data, my prediction is that WSB and GME holders are currently controlling the overall health of the market. If this data is accurate, then GME can be used as a possible predictor of overall market trends and consequently, possibly help for not just GME indicators, but also prospective market strategies/positions.
In short, when GME goes up, the market goes down.
TLDR; for data: I found that the NYA, DJIA, and IXIC are negatively correlated to GME. NYA ( NYA,p =.0027\\), (DJIA, p =.0018\\), (Nasdaq, p= 0.88)
START
I noticed that anytime GME is rallying up, my entire portfolio goes red. My thought process was that the hedge funds control such a large portion of the market that when they liquidate in order to battle GME the whole entire market falls as a result. However, whenever I mentioned this idea, I’ve been met with opposition, so I decided to compare the GME to the market indices I mentioned above.
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GME, DJIA, IXIC, NYA, YTD DATA
If you look at the chart, big drops in all three indices line up perfectly with any large rise in GME price. Meaning, while the whole market collapses GME rises. The opposite is also true, as GME drops, the rest of the market rises. The trends based on these comparisons suggest that GME is to some degree controlling the entire market. I decided to use some statistics so I can see the likelihood that these are “coincidences” as many have suggested.
PROCESS
I calculated covariance, correlation, and p test matrices based on YTD data from yahoo finance of GME, NYA, DJIA, IXIC. All data can be found there.
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Covariance & Correlation Matrices.
P values. Statistically significant values highlighted.
The results show that there is clear covariance between GME and all of the markets I mentioned. The correlation suggests that there is a moderate negative correlation between GME and the markets, but that makes sense given the vast size of the indices. But what was most important was the p values between GME and the NYA/DJIA. For those that are not into statistics, the p-value is essentially the percentage that the relationships are based on “luck” or “chance”. It is accepted and utilized in the scientific community to est