Correlation Between Pets At and Games Workshop
Can any of the company-specific risk be diversified away by investing in both Pets At 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 Pets At and Games Workshop into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pets at Home and Games Workshop Group, you can compare the effects of market volatilities on Pets At 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 Pets At with a short position of Games Workshop. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pets At and Games Workshop.
Diversification Opportunities for Pets At and Games Workshop
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Pets and Games is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Pets at Home 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 Pets At 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 Pets at Home 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 Pets At i.e., Pets At and Games Workshop go up and down completely randomly.
Pair Corralation between Pets At and Games Workshop
Assuming the 90 days trading horizon Pets at Home is expected to under-perform the Games Workshop. In addition to that, Pets At is 1.01 times more volatile than Games Workshop Group. It trades about -0.21 of its total potential returns per unit of risk. Games Workshop Group is currently generating about 0.21 per unit of volatility. If you would invest 1,067,392 in Games Workshop Group on August 30, 2024 and sell it today you would earn a total of 301,608 from holding Games Workshop Group or generate 28.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pets at Home vs. Games Workshop Group
Performance |
| Timeline |
| Pets at Home |
| Games Workshop Group |
Pets At and Games Workshop Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pets At and Games Workshop
The main advantage of trading using opposite Pets At and Games Workshop positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pets At 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.| Pets At vs. Home Depot | Pets At vs. Weiss Korea Opportunity | Pets At vs. River and Mercantile | Pets At vs. Chrysalis Investments |
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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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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