Correlation Between Games Workshop and Starbucks
Can any of the company-specific risk be diversified away by investing in both Games Workshop and Starbucks 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 Starbucks 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 Starbucks, you can compare the effects of market volatilities on Games Workshop and Starbucks 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 Starbucks. Check out your portfolio center. Please also check ongoing floating volatility patterns of Games Workshop and Starbucks.
Diversification Opportunities for Games Workshop and Starbucks
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Games and Starbucks is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Games Workshop Group and Starbucks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Starbucks 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 Starbucks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Starbucks has no effect on the direction of Games Workshop i.e., Games Workshop and Starbucks go up and down completely randomly.
Pair Corralation between Games Workshop and Starbucks
Assuming the 90 days trading horizon Games Workshop Group is expected to generate 1.57 times more return on investment than Starbucks. However, Games Workshop is 1.57 times more volatile than Starbucks. It trades about 0.29 of its potential returns per unit of risk. Starbucks is currently generating about 0.35 per unit of risk. If you would invest 15,487 in Games Workshop Group on October 25, 2024 and sell it today you would earn a total of 1,333 from holding Games Workshop Group or generate 8.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 94.44% |
| Values | Daily Returns |
Games Workshop Group vs. Starbucks
Performance |
| Timeline |
| Games Workshop Group |
| Starbucks |
Games Workshop and Starbucks Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Games Workshop and Starbucks
The main advantage of trading using opposite Games Workshop and Starbucks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Games Workshop position performs unexpectedly, Starbucks 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 Starbucks will offset losses from the drop in Starbucks' long position.| Games Workshop vs. Apple Inc | Games Workshop vs. Apple Inc | Games Workshop vs. Apple Inc | Games Workshop vs. Apple Inc |
| Starbucks vs. OURGAME INTHOLDL 00005 | Starbucks vs. Goodyear Tire Rubber | Starbucks vs. Gaming and Leisure | Starbucks vs. Games Workshop Group |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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