Correlation Between Games Workshop and River
Can any of the company-specific risk be diversified away by investing in both Games Workshop and River 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 River 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 River and Mercantile, you can compare the effects of market volatilities on Games Workshop and River 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 River. Check out your portfolio center. Please also check ongoing floating volatility patterns of Games Workshop and River.
Diversification Opportunities for Games Workshop and River
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Games and River is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Games Workshop Group and River and Mercantile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on River and Mercantile 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 River. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of River and Mercantile has no effect on the direction of Games Workshop i.e., Games Workshop and River go up and down completely randomly.
Pair Corralation between Games Workshop and River
Assuming the 90 days trading horizon Games Workshop Group is expected to generate 3.07 times more return on investment than River. However, Games Workshop is 3.07 times more volatile than River and Mercantile. It trades about 0.19 of its potential returns per unit of risk. River and Mercantile is currently generating about 0.14 per unit of risk. If you would invest 1,194,000 in Games Workshop Group on August 31, 2024 and sell it today you would earn a total of 193,000 from holding Games Workshop Group or generate 16.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Games Workshop Group vs. River and Mercantile
Performance |
| Timeline |
| Games Workshop Group |
| River and Mercantile |
Games Workshop and River Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Games Workshop and River
The main advantage of trading using opposite Games Workshop and River positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Games Workshop position performs unexpectedly, River 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 River will offset losses from the drop in River'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 |
| River vs. Orient Telecoms | River vs. Spirent Communications plc | River vs. Ironveld Plc | River vs. Universal Music Group |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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