Correlation Between Games Workshop and TMT Investments
Can any of the company-specific risk be diversified away by investing in both Games Workshop and TMT Investments 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 TMT Investments 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 TMT Investments PLC, you can compare the effects of market volatilities on Games Workshop and TMT Investments 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 TMT Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Games Workshop and TMT Investments.
Diversification Opportunities for Games Workshop and TMT Investments
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Games and TMT is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Games Workshop Group and TMT Investments PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TMT Investments 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 TMT Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TMT Investments PLC has no effect on the direction of Games Workshop i.e., Games Workshop and TMT Investments go up and down completely randomly.
Pair Corralation between Games Workshop and TMT Investments
Assuming the 90 days trading horizon Games Workshop Group is expected to generate 1.52 times more return on investment than TMT Investments. However, Games Workshop is 1.52 times more volatile than TMT Investments PLC. It trades about 0.2 of its potential returns per unit of risk. TMT Investments PLC is currently generating about -0.1 per unit of risk. If you would invest 1,175,000 in Games Workshop Group on August 25, 2024 and sell it today you would earn a total of 198,000 from holding Games Workshop Group or generate 16.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Games Workshop Group vs. TMT Investments PLC
Performance |
| Timeline |
| Games Workshop Group |
| TMT Investments PLC |
Games Workshop and TMT Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Games Workshop and TMT Investments
The main advantage of trading using opposite Games Workshop and TMT Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Games Workshop position performs unexpectedly, TMT Investments 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 TMT Investments will offset losses from the drop in TMT Investments' 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 |
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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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