Correlation Between X FAB and Games Workshop
Can any of the company-specific risk be diversified away by investing in both X FAB and Games Workshop 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 X FAB and Games Workshop into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between X FAB Silicon Foundries and Games Workshop Group, you can compare the effects of market volatilities on X FAB and Games Workshop 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 X FAB with a short position of Games Workshop. Check out your portfolio center. Please also check ongoing floating volatility patterns of X FAB and Games Workshop.
Diversification Opportunities for X FAB and Games Workshop
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between 0ROZ and Games is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding X FAB Silicon Foundries and Games Workshop Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Games Workshop Group and X FAB 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 X FAB Silicon Foundries are associated (or correlated) with Games Workshop. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Games Workshop Group has no effect on the direction of X FAB i.e., X FAB and Games Workshop go up and down completely randomly.
Pair Corralation between X FAB and Games Workshop
Assuming the 90 days trading horizon X FAB is expected to generate 1.73 times less return on investment than Games Workshop. But when comparing it to its historical volatility, X FAB Silicon Foundries is 1.38 times less risky than Games Workshop. It trades about 0.15 of its potential returns per unit of risk. Games Workshop Group is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 1,204,000 in Games Workshop Group on September 12, 2024 and sell it today you would earn a total of 186,000 from holding Games Workshop Group or generate 15.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
X FAB Silicon Foundries vs. Games Workshop Group
Performance |
| Timeline |
| X FAB Silicon |
| Games Workshop Group |
X FAB and Games Workshop Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with X FAB and Games Workshop
The main advantage of trading using opposite X FAB and Games Workshop positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if X FAB position performs unexpectedly, Games Workshop 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 Games Workshop will offset losses from the drop in Games Workshop's long position.| X FAB vs. Hong Kong Land | X FAB vs. Neometals | X FAB vs. Coor Service Management | X FAB vs. Fidelity Sustainable USD |
| Games Workshop vs. X FAB Silicon Foundries | Games Workshop vs. Cairn Homes PLC | Games Workshop vs. Synthomer plc | Games Workshop vs. Beazer Homes USA |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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