Correlation Between GameStop Corp and Games Workshop
Can any of the company-specific risk be diversified away by investing in both GameStop Corp and Games Workshop 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 GameStop Corp and Games Workshop into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GameStop Corp and Games Workshop Group, you can compare the effects of market volatilities on GameStop Corp and Games Workshop 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 GameStop Corp with a short position of Games Workshop. Check out your portfolio center. Please also check ongoing floating volatility patterns of GameStop Corp and Games Workshop.
Diversification Opportunities for GameStop Corp and Games Workshop
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between GameStop and Games is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding GameStop Corp and Games Workshop Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Games Workshop Group and GameStop Corp 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 GameStop Corp are associated (or correlated) with Games Workshop. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Games Workshop Group has no effect on the direction of GameStop Corp i.e., GameStop Corp and Games Workshop go up and down completely randomly.
Pair Corralation between GameStop Corp and Games Workshop
Assuming the 90 days trading horizon GameStop Corp is expected to generate 0.97 times more return on investment than Games Workshop. However, GameStop Corp is 1.03 times less risky than Games Workshop. It trades about 0.39 of its potential returns per unit of risk. Games Workshop Group is currently generating about 0.18 per unit of risk. If you would invest 1,900 in GameStop Corp on August 25, 2024 and sell it today you would earn a total of 783.00 from holding GameStop Corp or generate 41.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GameStop Corp vs. Games Workshop Group
Performance |
| Timeline |
| GameStop Corp |
| Games Workshop Group |
GameStop Corp and Games Workshop Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GameStop Corp and Games Workshop
The main advantage of trading using opposite GameStop Corp and Games Workshop positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GameStop Corp position performs unexpectedly, Games Workshop 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 Games Workshop will offset losses from the drop in Games Workshop's long position.| GameStop Corp vs. eBay Inc | GameStop Corp vs. Superior Plus Corp | GameStop Corp vs. NMI Holdings | GameStop Corp vs. Origin Agritech |
| Games Workshop vs. NISSAN CHEMICAL IND | Games Workshop vs. LG Display Co | Games Workshop vs. WESTLAKE CHEMICAL | Games Workshop vs. Sanyo Chemical Industries |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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