Correlation Between Carnival Plc and Games Workshop
Can any of the company-specific risk be diversified away by investing in both Carnival Plc 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 Carnival Plc and Games Workshop into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Carnival Plc ADS and Games Workshop Group, you can compare the effects of market volatilities on Carnival Plc 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 Carnival Plc with a short position of Games Workshop. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carnival Plc and Games Workshop.
Diversification Opportunities for Carnival Plc and Games Workshop
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Carnival and Games is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Carnival Plc ADS 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 Carnival Plc 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 Carnival Plc ADS 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 Carnival Plc i.e., Carnival Plc and Games Workshop go up and down completely randomly.
Pair Corralation between Carnival Plc and Games Workshop
Considering the 90-day investment horizon Carnival Plc ADS is expected to generate 0.94 times more return on investment than Games Workshop. However, Carnival Plc ADS is 1.06 times less risky than Games Workshop. It trades about 0.08 of its potential returns per unit of risk. Games Workshop Group is currently generating about 0.06 per unit of risk. If you would invest 866.00 in Carnival Plc ADS on August 25, 2024 and sell it today you would earn a total of 1,386 from holding Carnival Plc ADS or generate 160.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 80.48% |
| Values | Daily Returns |
Carnival Plc ADS vs. Games Workshop Group
Performance |
| Timeline |
| Carnival Plc ADS |
| Games Workshop Group |
Carnival Plc and Games Workshop Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Carnival Plc and Games Workshop
The main advantage of trading using opposite Carnival Plc and Games Workshop positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carnival Plc 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.| Carnival Plc vs. Callaway Golf | Carnival Plc vs. Peloton Interactive | Carnival Plc vs. Vista Outdoor | Carnival Plc vs. Clarus Corp |
| Games Workshop vs. HUMANA INC | Games Workshop vs. Aquagold International | Games Workshop vs. Barloworld Ltd ADR | Games Workshop vs. Morningstar Unconstrained Allocation |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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