Correlation Between Games Workshop and REVO INSURANCE
Can any of the company-specific risk be diversified away by investing in both Games Workshop and REVO INSURANCE 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 REVO INSURANCE 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 REVO INSURANCE SPA, you can compare the effects of market volatilities on Games Workshop and REVO INSURANCE 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 REVO INSURANCE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Games Workshop and REVO INSURANCE.
Diversification Opportunities for Games Workshop and REVO INSURANCE
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Games and REVO is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Games Workshop Group and REVO INSURANCE SPA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on REVO INSURANCE SPA 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 REVO INSURANCE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of REVO INSURANCE SPA has no effect on the direction of Games Workshop i.e., Games Workshop and REVO INSURANCE go up and down completely randomly.
Pair Corralation between Games Workshop and REVO INSURANCE
Assuming the 90 days trading horizon Games Workshop Group is expected to generate 3.08 times more return on investment than REVO INSURANCE. However, Games Workshop is 3.08 times more volatile than REVO INSURANCE SPA. It trades about 0.21 of its potential returns per unit of risk. REVO INSURANCE SPA is currently generating about 0.25 per unit of risk. If you would invest 14,170 in Games Workshop Group on September 5, 2024 and sell it today you would earn a total of 2,970 from holding Games Workshop Group or generate 20.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Games Workshop Group vs. REVO INSURANCE SPA
Performance |
| Timeline |
| Games Workshop Group |
| REVO INSURANCE SPA |
Games Workshop and REVO INSURANCE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Games Workshop and REVO INSURANCE
The main advantage of trading using opposite Games Workshop and REVO INSURANCE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Games Workshop position performs unexpectedly, REVO INSURANCE 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 REVO INSURANCE will offset losses from the drop in REVO INSURANCE'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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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