Correlation Between Games Workshop and Air Transport
Can any of the company-specific risk be diversified away by investing in both Games Workshop and Air Transport 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 Games Workshop and Air Transport into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Games Workshop Group and Air Transport Services, you can compare the effects of market volatilities on Games Workshop and Air Transport 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 Games Workshop with a short position of Air Transport. Check out your portfolio center. Please also check ongoing floating volatility patterns of Games Workshop and Air Transport.
Diversification Opportunities for Games Workshop and Air Transport
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Games and Air is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Games Workshop Group and Air Transport Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Transport Services and Games Workshop 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 Games Workshop Group are associated (or correlated) with Air Transport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Transport Services has no effect on the direction of Games Workshop i.e., Games Workshop and Air Transport go up and down completely randomly.
Pair Corralation between Games Workshop and Air Transport
Assuming the 90 days trading horizon Games Workshop is expected to generate 2.05 times less return on investment than Air Transport. But when comparing it to its historical volatility, Games Workshop Group is 1.24 times less risky than Air Transport. It trades about 0.18 of its potential returns per unit of risk. Air Transport Services is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 1,500 in Air Transport Services on August 25, 2024 and sell it today you would earn a total of 580.00 from holding Air Transport Services or generate 38.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Games Workshop Group vs. Air Transport Services
Performance |
| Timeline |
| Games Workshop Group |
| Air Transport Services |
Games Workshop and Air Transport Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Games Workshop and Air Transport
The main advantage of trading using opposite Games Workshop and Air Transport positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Games Workshop position performs unexpectedly, Air Transport 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 Air Transport will offset losses from the drop in Air Transport's long position.| Games Workshop vs. Apple Inc | Games Workshop vs. Apple Inc | Games Workshop vs. Apple Inc | Games Workshop vs. Apple Inc |
| Air Transport vs. OURGAME INTHOLDL 00005 | Air Transport vs. Penn National Gaming | Air Transport vs. Games Workshop Group | Air Transport vs. PENN NATL GAMING |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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