Correlation Between Games Workshop and Mercantile Investment
Can any of the company-specific risk be diversified away by investing in both Games Workshop and Mercantile Investment 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 Mercantile Investment 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 The Mercantile Investment, you can compare the effects of market volatilities on Games Workshop and Mercantile Investment 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 Mercantile Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Games Workshop and Mercantile Investment.
Diversification Opportunities for Games Workshop and Mercantile Investment
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Games and Mercantile is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Games Workshop Group and The Mercantile Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Mercantile 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 Mercantile Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of The Mercantile Investment has no effect on the direction of Games Workshop i.e., Games Workshop and Mercantile Investment go up and down completely randomly.
Pair Corralation between Games Workshop and Mercantile Investment
Assuming the 90 days trading horizon Games Workshop Group is expected to generate 3.26 times more return on investment than Mercantile Investment. However, Games Workshop is 3.26 times more volatile than The Mercantile Investment. It trades about 0.14 of its potential returns per unit of risk. The Mercantile Investment is currently generating about -0.08 per unit of risk. If you would invest 1,201,000 in Games Workshop Group on August 28, 2024 and sell it today you would earn a total of 139,000 from holding Games Workshop Group or generate 11.57% 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. The Mercantile Investment
Performance |
| Timeline |
| Games Workshop Group |
| The Mercantile Investment |
Games Workshop and Mercantile Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Games Workshop and Mercantile Investment
The main advantage of trading using opposite Games Workshop and Mercantile Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Games Workshop position performs unexpectedly, Mercantile Investment 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 Mercantile Investment will offset losses from the drop in Mercantile Investment's long position.| Games Workshop vs. SupplyMe Capital PLC | Games Workshop vs. FuelCell Energy | Games Workshop vs. Grand Vision Media | Games Workshop vs. DG Innovate PLC |
| Mercantile Investment vs. Catalyst Media Group | Mercantile Investment vs. Oncimmune Holdings plc | Mercantile Investment vs. Invesco Health Care | Mercantile Investment vs. Coor Service Management |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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