Correlation Between Charter Communications and Games Workshop

Can any of the company-specific risk be diversified away by investing in both Charter Communications 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 Charter Communications and Games Workshop into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Charter Communications Cl and Games Workshop Group, you can compare the effects of market volatilities on Charter Communications 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 Charter Communications with a short position of Games Workshop. Check out your portfolio center. Please also check ongoing floating volatility patterns of Charter Communications and Games Workshop.

Diversification Opportunities for Charter Communications and Games Workshop

0.65

Correlation Coefficient

Charter Communications  Games Workshop

Poor diversification

The 3 months correlation between Charter and Games is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Charter Communications Cl 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 Charter Communications 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 Charter Communications Cl 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 Charter Communications i.e., Charter Communications and Games Workshop go up and down completely randomly.

Pair Corralation between Charter Communications and Games Workshop

Assuming the 90 days trading horizon Charter Communications Cl is expected to under-perform the Games Workshop. In addition to that, Charter Communications is 1.23 times more volatile than Games Workshop Group. It trades about 0.0 of its total potential returns per unit of risk. Games Workshop Group is currently generating about 0.06 per unit of volatility. If you would invest  872,296  in Games Workshop Group on September 26, 2024 and sell it today you would earn a total of  449,704  from holding Games Workshop Group or generate 51.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.17%
Values	Daily Returns

Charter Communications Cl  vs.  Games Workshop Group

Charter Communications

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Charter Communications Cl are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Charter Communications may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Games Workshop Group

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Games Workshop Group are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Games Workshop exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Charter Communications and Games Workshop

The main advantage of trading using opposite Charter Communications and Games Workshop positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Charter Communications 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 Charter Communications Cl 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.