Correlation Between Games Workshop and Empire Metals
Can any of the company-specific risk be diversified away by investing in both Games Workshop and Empire Metals 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 Empire Metals 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 Empire Metals Limited, you can compare the effects of market volatilities on Games Workshop and Empire Metals 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 Empire Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Games Workshop and Empire Metals.
Diversification Opportunities for Games Workshop and Empire Metals
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Games and Empire is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Games Workshop Group and Empire Metals Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Empire Metals Limited 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 Empire Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Empire Metals Limited has no effect on the direction of Games Workshop i.e., Games Workshop and Empire Metals go up and down completely randomly.
Pair Corralation between Games Workshop and Empire Metals
Assuming the 90 days trading horizon Games Workshop Group is expected to under-perform the Empire Metals. But the stock apears to be less risky and, when comparing its historical volatility, Games Workshop Group is 4.49 times less risky than Empire Metals. The stock trades about -0.08 of its potential returns per unit of risk. The Empire Metals Limited is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 890.00 in Empire Metals Limited on November 28, 2024 and sell it today you would earn a total of 4.00 from holding Empire Metals Limited or generate 0.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Games Workshop Group vs. Empire Metals Limited
Performance |
| Timeline |
| Games Workshop Group |
| Empire Metals Limited |
Games Workshop and Empire Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Games Workshop and Empire Metals
The main advantage of trading using opposite Games Workshop and Empire Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Games Workshop position performs unexpectedly, Empire Metals 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 Empire Metals will offset losses from the drop in Empire Metals' long position.| Games Workshop vs. Livermore Investments Group | Games Workshop vs. Kinnevik Investment AB | Games Workshop vs. Jade Road Investments | Games Workshop vs. Aurora Investment Trust |
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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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