Correlation Between GAMESTOP and Games Workshop

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

Diversification Opportunities for GAMESTOP and Games Workshop

-0.31

Correlation Coefficient

GAMESTOP  Games Workshop

Very good diversification

The 3 months correlation between GAMESTOP and Games is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding GAMESTOP 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 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 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 i.e., GAMESTOP and Games Workshop go up and down completely randomly.

Pair Corralation between GAMESTOP and Games Workshop

Assuming the 90 days trading horizon GAMESTOP is expected to generate 1.34 times less return on investment than Games Workshop. In addition to that, GAMESTOP is 2.4 times more volatile than Games Workshop Group. It trades about 0.01 of its total potential returns per unit of risk. Games Workshop Group is currently generating about 0.04 per unit of volatility. If you would invest  7,621  in Games Workshop Group on February 7, 2024 and sell it today you would earn a total of  3,519  from holding Games Workshop Group or generate 46.18% return on investment over 90 days.

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

GAMESTOP  vs.  Games Workshop Group

GAMESTOP

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in GAMESTOP are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, GAMESTOP unveiled solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with GAMESTOP and Games Workshop

The main advantage of trading using opposite GAMESTOP and Games Workshop positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GAMESTOP 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.

The idea behind GAMESTOP and Games Workshop Group 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.

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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.