Correlation Between Games Workshop and PENN NATL

Can any of the company-specific risk be diversified away by investing in both Games Workshop and PENN NATL 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 PENN NATL 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 PENN NATL GAMING, you can compare the effects of market volatilities on Games Workshop and PENN NATL 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 PENN NATL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Games Workshop and PENN NATL.

Diversification Opportunities for Games Workshop and PENN NATL

-0.02

Correlation Coefficient

Games Workshop  PENN NATL

Good diversification

The 3 months correlation between Games and PENN is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Games Workshop Group and PENN NATL GAMING in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PENN NATL GAMING 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 PENN NATL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PENN NATL GAMING has no effect on the direction of Games Workshop i.e., Games Workshop and PENN NATL go up and down completely randomly.

Pair Corralation between Games Workshop and PENN NATL

Assuming the 90 days trading horizon Games Workshop Group is expected to generate 0.76 times more return on investment than PENN NATL. However, Games Workshop Group is 1.31 times less risky than PENN NATL. It trades about -0.02 of its potential returns per unit of risk. PENN NATL GAMING is currently generating about -0.19 per unit of risk. If you would invest  11,320  in Games Workshop Group on February 7, 2024 and sell it today you would lose (180.00) from holding Games Workshop Group or give up 1.59% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Games Workshop Group  vs.  PENN NATL GAMING

Games Workshop Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Games Workshop Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Games Workshop is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

PENN NATL GAMING

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PENN NATL GAMING has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in June 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Games Workshop and PENN NATL

The main advantage of trading using opposite Games Workshop and PENN NATL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Games Workshop position performs unexpectedly, PENN NATL 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 PENN NATL will offset losses from the drop in PENN NATL's long position.

The idea behind Games Workshop Group and PENN NATL GAMING pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.