Correlation Between Games Workshop and Norsk Hydro
Can any of the company-specific risk be diversified away by investing in both Games Workshop and Norsk Hydro 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 Norsk Hydro 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 Norsk Hydro ASA, you can compare the effects of market volatilities on Games Workshop and Norsk Hydro 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 Norsk Hydro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Games Workshop and Norsk Hydro.
Diversification Opportunities for Games Workshop and Norsk Hydro
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Games and Norsk is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Games Workshop Group and Norsk Hydro ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Norsk Hydro ASA 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 Norsk Hydro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Norsk Hydro ASA has no effect on the direction of Games Workshop i.e., Games Workshop and Norsk Hydro go up and down completely randomly.
Pair Corralation between Games Workshop and Norsk Hydro
Assuming the 90 days trading horizon Games Workshop Group is expected to generate 0.82 times more return on investment than Norsk Hydro. However, Games Workshop Group is 1.22 times less risky than Norsk Hydro. It trades about 0.08 of its potential returns per unit of risk. Norsk Hydro ASA is currently generating about 0.01 per unit of risk. If you would invest 11,595 in Games Workshop Group on September 14, 2024 and sell it today you would earn a total of 5,335 from holding Games Workshop Group or generate 46.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Games Workshop Group vs. Norsk Hydro ASA
Performance |
| Timeline |
| Games Workshop Group |
| Norsk Hydro ASA |
Games Workshop and Norsk Hydro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Games Workshop and Norsk Hydro
The main advantage of trading using opposite Games Workshop and Norsk Hydro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Games Workshop position performs unexpectedly, Norsk Hydro 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 Norsk Hydro will offset losses from the drop in Norsk Hydro's long position.| Games Workshop vs. Apple Inc | Games Workshop vs. Apple Inc | Games Workshop vs. Apple Inc | Games Workshop vs. Apple Inc |
| Norsk Hydro vs. CVR Medical Corp | Norsk Hydro vs. National Beverage Corp | Norsk Hydro vs. Lendlease Group | Norsk Hydro vs. ALBIS LEASING AG |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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