Correlation Between Games Workshop and Spirent Communications
Can any of the company-specific risk be diversified away by investing in both Games Workshop and Spirent Communications 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 Spirent Communications 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 Spirent Communications plc, you can compare the effects of market volatilities on Games Workshop and Spirent Communications 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 Spirent Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Games Workshop and Spirent Communications.
Diversification Opportunities for Games Workshop and Spirent Communications
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Games and Spirent is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Games Workshop Group and Spirent Communications plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spirent Communications 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 Spirent Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spirent Communications has no effect on the direction of Games Workshop i.e., Games Workshop and Spirent Communications go up and down completely randomly.
Pair Corralation between Games Workshop and Spirent Communications
Assuming the 90 days trading horizon Games Workshop Group is expected to generate 0.5 times more return on investment than Spirent Communications. However, Games Workshop Group is 2.01 times less risky than Spirent Communications. It trades about 0.06 of its potential returns per unit of risk. Spirent Communications plc is currently generating about 0.01 per unit of risk. If you would invest 850,782 in Games Workshop Group on October 16, 2024 and sell it today you would earn a total of 472,218 from holding Games Workshop Group or generate 55.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Games Workshop Group vs. Spirent Communications plc
Performance |
| Timeline |
| Games Workshop Group |
| Spirent Communications |
Games Workshop and Spirent Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Games Workshop and Spirent Communications
The main advantage of trading using opposite Games Workshop and Spirent Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Games Workshop position performs unexpectedly, Spirent Communications 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 Spirent Communications will offset losses from the drop in Spirent Communications' long position.| Games Workshop vs. Tatton Asset Management | Games Workshop vs. Verizon Communications | Games Workshop vs. Charter Communications Cl | Games Workshop vs. Batm Advanced Communications |
| Spirent Communications vs. Games Workshop Group | Spirent Communications vs. JB Hunt Transport | Spirent Communications vs. Trainline Plc | Spirent Communications vs. Norman Broadbent Plc |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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