Correlation Between Ford and Games Workshop
Can any of the company-specific risk be diversified away by investing in both Ford 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 Ford and Games Workshop into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Games Workshop Group, you can compare the effects of market volatilities on Ford 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 Ford with a short position of Games Workshop. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Games Workshop.
Diversification Opportunities for Ford and Games Workshop
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ford and Games is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor 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 Ford 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 Ford Motor 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 Ford i.e., Ford and Games Workshop go up and down completely randomly.
Pair Corralation between Ford and Games Workshop
Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the Games Workshop. But the stock apears to be less risky and, when comparing its historical volatility, Ford Motor is 1.02 times less risky than Games Workshop. The stock trades about 0.0 of its potential returns per unit of risk. The Games Workshop Group is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 10,088 in Games Workshop Group on August 31, 2024 and sell it today you would earn a total of 6,812 from holding Games Workshop Group or generate 67.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.16% |
| Values | Daily Returns |
Ford Motor vs. Games Workshop Group
Performance |
| Timeline |
| Ford Motor |
| Games Workshop Group |
Ford and Games Workshop Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Games Workshop
The main advantage of trading using opposite Ford and Games Workshop positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford 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.The idea behind Ford Motor and Games Workshop Group 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.| Games Workshop vs. Apple Inc | Games Workshop vs. Apple Inc | Games Workshop vs. Apple Inc | Games Workshop vs. Apple Inc |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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