Correlation Between Coffee Holding and Games Workshop
Can any of the company-specific risk be diversified away by investing in both Coffee Holding 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 Coffee Holding and Games Workshop into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Coffee Holding Co and Games Workshop Group, you can compare the effects of market volatilities on Coffee Holding 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 Coffee Holding with a short position of Games Workshop. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coffee Holding and Games Workshop.
Diversification Opportunities for Coffee Holding and Games Workshop
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Coffee and Games is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Coffee Holding Co 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 Coffee Holding 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 Coffee Holding Co 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 Coffee Holding i.e., Coffee Holding and Games Workshop go up and down completely randomly.
Pair Corralation between Coffee Holding and Games Workshop
Assuming the 90 days horizon Coffee Holding is expected to generate 5.73 times less return on investment than Games Workshop. In addition to that, Coffee Holding is 2.2 times more volatile than Games Workshop Group. It trades about 0.02 of its total potential returns per unit of risk. Games Workshop Group is currently generating about 0.3 per unit of volatility. If you would invest 15,665 in Games Workshop Group on November 7, 2024 and sell it today you would earn a total of 1,785 from holding Games Workshop Group or generate 11.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Coffee Holding Co vs. Games Workshop Group
Performance |
| Timeline |
| Coffee Holding |
| Games Workshop Group |
Coffee Holding and Games Workshop Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coffee Holding and Games Workshop
The main advantage of trading using opposite Coffee Holding and Games Workshop positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coffee Holding 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.| Coffee Holding vs. Beta Systems Software | Coffee Holding vs. Cal Maine Foods | Coffee Holding vs. Alfa Financial Software | Coffee Holding vs. United Natural Foods |
| Games Workshop vs. COMBA TELECOM SYST | Games Workshop vs. Highlight Communications AG | Games Workshop vs. Spirent Communications plc | Games Workshop vs. SK TELECOM TDADR |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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