Correlation Between Games Workshop and Insurance Australia
Can any of the company-specific risk be diversified away by investing in both Games Workshop and Insurance Australia 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 Insurance Australia 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 Insurance Australia Group, you can compare the effects of market volatilities on Games Workshop and Insurance Australia 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 Insurance Australia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Games Workshop and Insurance Australia.
Diversification Opportunities for Games Workshop and Insurance Australia
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Games and Insurance is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Games Workshop Group and Insurance Australia Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Insurance Australia 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 Insurance Australia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Insurance Australia has no effect on the direction of Games Workshop i.e., Games Workshop and Insurance Australia go up and down completely randomly.
Pair Corralation between Games Workshop and Insurance Australia
Assuming the 90 days trading horizon Games Workshop Group is expected to generate 1.81 times more return on investment than Insurance Australia. However, Games Workshop is 1.81 times more volatile than Insurance Australia Group. It trades about 0.21 of its potential returns per unit of risk. Insurance Australia Group is currently generating about 0.32 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 | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Games Workshop Group vs. Insurance Australia Group
Performance |
| Timeline |
| Games Workshop Group |
| Insurance Australia |
Games Workshop and Insurance Australia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Games Workshop and Insurance Australia
The main advantage of trading using opposite Games Workshop and Insurance Australia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Games Workshop position performs unexpectedly, Insurance Australia 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 Insurance Australia will offset losses from the drop in Insurance Australia's long position.| Games Workshop vs. Apple Inc | Games Workshop vs. Apple Inc | Games Workshop vs. Apple Inc | Games Workshop vs. Apple Inc |
| Insurance Australia vs. AEON STORES | Insurance Australia vs. FUYO GENERAL LEASE | Insurance Australia vs. United Rentals | Insurance Australia vs. SPARTAN STORES |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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