Correlation Between Games Workshop and Trainline Plc
Can any of the company-specific risk be diversified away by investing in both Games Workshop and Trainline Plc 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 Trainline Plc 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 Trainline Plc, you can compare the effects of market volatilities on Games Workshop and Trainline Plc 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 Trainline Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Games Workshop and Trainline Plc.
Diversification Opportunities for Games Workshop and Trainline Plc
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Games and Trainline is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Games Workshop Group and Trainline Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trainline 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 Trainline Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trainline Plc has no effect on the direction of Games Workshop i.e., Games Workshop and Trainline Plc go up and down completely randomly.
Pair Corralation between Games Workshop and Trainline Plc
Assuming the 90 days trading horizon Games Workshop Group is expected to generate 0.72 times more return on investment than Trainline Plc. However, Games Workshop Group is 1.38 times less risky than Trainline Plc. It trades about 0.07 of its potential returns per unit of risk. Trainline Plc is currently generating about 0.05 per unit of risk. If you would invest 779,248 in Games Workshop Group on September 12, 2024 and sell it today you would earn a total of 610,752 from holding Games Workshop Group or generate 78.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Games Workshop Group vs. Trainline Plc
Performance |
| Timeline |
| Games Workshop Group |
| Trainline Plc |
Games Workshop and Trainline Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Games Workshop and Trainline Plc
The main advantage of trading using opposite Games Workshop and Trainline Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Games Workshop position performs unexpectedly, Trainline Plc 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 Trainline Plc will offset losses from the drop in Trainline Plc's long position.| Games Workshop vs. X FAB Silicon Foundries | Games Workshop vs. Cairn Homes PLC | Games Workshop vs. Synthomer plc | Games Workshop vs. Beazer Homes USA |
| Trainline Plc vs. National Atomic Co | Trainline Plc vs. OTP Bank Nyrt | Trainline Plc vs. Samsung Electronics Co | Trainline Plc vs. Samsung Electronics Co |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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