Correlation Between URBAN OUTFITTERS and Games Workshop
Can any of the company-specific risk be diversified away by investing in both URBAN OUTFITTERS 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 URBAN OUTFITTERS and Games Workshop into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between URBAN OUTFITTERS and Games Workshop Group, you can compare the effects of market volatilities on URBAN OUTFITTERS 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 URBAN OUTFITTERS with a short position of Games Workshop. Check out your portfolio center. Please also check ongoing floating volatility patterns of URBAN OUTFITTERS and Games Workshop.
Diversification Opportunities for URBAN OUTFITTERS and Games Workshop
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between URBAN and Games is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding URBAN OUTFITTERS 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 URBAN OUTFITTERS 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 URBAN OUTFITTERS 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 URBAN OUTFITTERS i.e., URBAN OUTFITTERS and Games Workshop go up and down completely randomly.
Pair Corralation between URBAN OUTFITTERS and Games Workshop
Assuming the 90 days trading horizon URBAN OUTFITTERS is expected to generate 1.05 times more return on investment than Games Workshop. However, URBAN OUTFITTERS is 1.05 times more volatile than Games Workshop Group. It trades about 0.3 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 3,660 in URBAN OUTFITTERS on September 12, 2024 and sell it today you would earn a total of 1,240 from holding URBAN OUTFITTERS or generate 33.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
URBAN OUTFITTERS vs. Games Workshop Group
Performance |
| Timeline |
| URBAN OUTFITTERS |
| Games Workshop Group |
URBAN OUTFITTERS and Games Workshop Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with URBAN OUTFITTERS and Games Workshop
The main advantage of trading using opposite URBAN OUTFITTERS and Games Workshop positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if URBAN OUTFITTERS 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.| URBAN OUTFITTERS vs. Apple Inc | URBAN OUTFITTERS vs. Apple Inc | URBAN OUTFITTERS vs. Apple Inc | URBAN OUTFITTERS vs. Apple Inc |
| Games Workshop vs. Apple Inc | Games Workshop vs. Apple Inc | Games Workshop vs. Apple Inc | Games Workshop vs. Apple Inc |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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