Correlation Between Games Workshop and Macfarlane Group
Can any of the company-specific risk be diversified away by investing in both Games Workshop and Macfarlane Group 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 Macfarlane Group 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 Macfarlane Group PLC, you can compare the effects of market volatilities on Games Workshop and Macfarlane Group 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 Macfarlane Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Games Workshop and Macfarlane Group.
Diversification Opportunities for Games Workshop and Macfarlane Group
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Games and Macfarlane is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Games Workshop Group and Macfarlane Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Macfarlane Group PLC 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 Macfarlane Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Macfarlane Group PLC has no effect on the direction of Games Workshop i.e., Games Workshop and Macfarlane Group go up and down completely randomly.
Pair Corralation between Games Workshop and Macfarlane Group
Assuming the 90 days trading horizon Games Workshop Group is expected to generate 2.84 times more return on investment than Macfarlane Group. However, Games Workshop is 2.84 times more volatile than Macfarlane Group PLC. It trades about 0.2 of its potential returns per unit of risk. Macfarlane Group PLC is currently generating about -0.21 per unit of risk. If you would invest 1,204,000 in Games Workshop Group on September 2, 2024 and sell it today you would earn a total of 209,000 from holding Games Workshop Group or generate 17.36% 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. Macfarlane Group PLC
Performance |
| Timeline |
| Games Workshop Group |
| Macfarlane Group PLC |
Games Workshop and Macfarlane Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Games Workshop and Macfarlane Group
The main advantage of trading using opposite Games Workshop and Macfarlane Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Games Workshop position performs unexpectedly, Macfarlane Group 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 Macfarlane Group will offset losses from the drop in Macfarlane Group's long position.| Games Workshop vs. Uniper SE | Games Workshop vs. Mulberry Group PLC | Games Workshop vs. London Security Plc | Games Workshop vs. Triad Group 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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