Correlation Between Games Workshop and Lindsell Train
Can any of the company-specific risk be diversified away by investing in both Games Workshop and Lindsell Train 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 Lindsell Train 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 Lindsell Train Investment, you can compare the effects of market volatilities on Games Workshop and Lindsell Train 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 Lindsell Train. Check out your portfolio center. Please also check ongoing floating volatility patterns of Games Workshop and Lindsell Train.
Diversification Opportunities for Games Workshop and Lindsell Train
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Games and Lindsell is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Games Workshop Group and Lindsell Train Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lindsell Train Investment 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 Lindsell Train. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lindsell Train Investment has no effect on the direction of Games Workshop i.e., Games Workshop and Lindsell Train go up and down completely randomly.
Pair Corralation between Games Workshop and Lindsell Train
Assuming the 90 days trading horizon Games Workshop Group is expected to generate 1.56 times more return on investment than Lindsell Train. However, Games Workshop is 1.56 times more volatile than Lindsell Train Investment. It trades about 0.2 of its potential returns per unit of risk. Lindsell Train Investment is currently generating about -0.11 per unit of risk. If you would invest 1,025,689 in Games Workshop Group on August 31, 2024 and sell it today you would earn a total of 361,311 from holding Games Workshop Group or generate 35.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Games Workshop Group vs. Lindsell Train Investment
Performance |
| Timeline |
| Games Workshop Group |
| Lindsell Train Investment |
Games Workshop and Lindsell Train Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Games Workshop and Lindsell Train
The main advantage of trading using opposite Games Workshop and Lindsell Train positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Games Workshop position performs unexpectedly, Lindsell Train 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 Lindsell Train will offset losses from the drop in Lindsell Train's long position.| Games Workshop vs. Intuitive Investments Group | Games Workshop vs. Host Hotels Resorts | Games Workshop vs. FC Investment Trust | Games Workshop vs. Bankers 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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