Correlation Between Games Workshop and SMA Solar
Can any of the company-specific risk be diversified away by investing in both Games Workshop and SMA Solar 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 SMA Solar 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 SMA Solar Technology, you can compare the effects of market volatilities on Games Workshop and SMA Solar 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 SMA Solar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Games Workshop and SMA Solar.
Diversification Opportunities for Games Workshop and SMA Solar
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Games and SMA is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Games Workshop Group and SMA Solar Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SMA Solar Technology 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 SMA Solar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SMA Solar Technology has no effect on the direction of Games Workshop i.e., Games Workshop and SMA Solar go up and down completely randomly.
Pair Corralation between Games Workshop and SMA Solar
Assuming the 90 days trading horizon Games Workshop Group is expected to generate 0.53 times more return on investment than SMA Solar. However, Games Workshop Group is 1.89 times less risky than SMA Solar. It trades about 0.07 of its potential returns per unit of risk. SMA Solar Technology is currently generating about -0.11 per unit of risk. If you would invest 1,041,714 in Games Workshop Group on September 14, 2024 and sell it today you would earn a total of 365,286 from holding Games Workshop Group or generate 35.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Games Workshop Group vs. SMA Solar Technology
Performance |
| Timeline |
| Games Workshop Group |
| SMA Solar Technology |
Games Workshop and SMA Solar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Games Workshop and SMA Solar
The main advantage of trading using opposite Games Workshop and SMA Solar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Games Workshop position performs unexpectedly, SMA Solar 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 SMA Solar will offset losses from the drop in SMA Solar's long position.| Games Workshop vs. iShares Physical Silver | Games Workshop vs. Centaur Media | Games Workshop vs. Atresmedia | Games Workshop vs. Hochschild Mining plc |
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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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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