Correlation Between Games Workshop and Bank Of
Can any of the company-specific risk be diversified away by investing in both Games Workshop and Bank Of 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 Bank Of 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 The Bank of, you can compare the effects of market volatilities on Games Workshop and Bank Of 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 Bank Of. Check out your portfolio center. Please also check ongoing floating volatility patterns of Games Workshop and Bank Of.
Diversification Opportunities for Games Workshop and Bank Of
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Games and Bank is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Games Workshop Group and The Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Bank 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 Bank Of. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of The Bank has no effect on the direction of Games Workshop i.e., Games Workshop and Bank Of go up and down completely randomly.
Pair Corralation between Games Workshop and Bank Of
Assuming the 90 days trading horizon Games Workshop is expected to generate 1.06 times less return on investment than Bank Of. In addition to that, Games Workshop is 2.69 times more volatile than The Bank of. It trades about 0.09 of its total potential returns per unit of risk. The Bank of is currently generating about 0.25 per unit of volatility. If you would invest 7,022 in The Bank of on August 29, 2024 and sell it today you would earn a total of 664.00 from holding The Bank of or generate 9.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Games Workshop Group vs. The Bank of
Performance |
| Timeline |
| Games Workshop Group |
| The Bank |
Games Workshop and Bank Of Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Games Workshop and Bank Of
The main advantage of trading using opposite Games Workshop and Bank Of positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Games Workshop position performs unexpectedly, Bank Of 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 Bank Of will offset losses from the drop in Bank Of's long position.| Games Workshop vs. Transport International Holdings | Games Workshop vs. Transportadora de Gas | Games Workshop vs. SCIENCE IN SPORT | Games Workshop vs. United Airlines Holdings |
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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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