Correlation Between Games Workshop and CSL
Can any of the company-specific risk be diversified away by investing in both Games Workshop and CSL 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 CSL 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 CSL Limited, you can compare the effects of market volatilities on Games Workshop and CSL 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 CSL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Games Workshop and CSL.
Diversification Opportunities for Games Workshop and CSL
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Games and CSL is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Games Workshop Group and CSL Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSL Limited 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 CSL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CSL Limited has no effect on the direction of Games Workshop i.e., Games Workshop and CSL go up and down completely randomly.
Pair Corralation between Games Workshop and CSL
Assuming the 90 days trading horizon Games Workshop Group is expected to generate 2.98 times more return on investment than CSL. However, Games Workshop is 2.98 times more volatile than CSL Limited. It trades about 0.21 of its potential returns per unit of risk. CSL Limited is currently generating about -0.05 per unit of risk. If you would invest 14,100 in Games Workshop Group on September 13, 2024 and sell it today you would earn a total of 2,800 from holding Games Workshop Group or generate 19.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Games Workshop Group vs. CSL Limited
Performance |
| Timeline |
| Games Workshop Group |
| CSL Limited |
Games Workshop and CSL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Games Workshop and CSL
The main advantage of trading using opposite Games Workshop and CSL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Games Workshop position performs unexpectedly, CSL 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 CSL will offset losses from the drop in CSL's long position.| Games Workshop vs. Apple Inc | Games Workshop vs. Apple Inc | Games Workshop vs. Apple Inc | Games Workshop vs. Apple Inc |
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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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