Correlation Between Host Hotels and Games Workshop

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

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

Diversification Opportunities for Host Hotels and Games Workshop

-0.46

Correlation Coefficient

Host Hotels  Games Workshop

Very good diversification

The 3 months correlation between Host and Games is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Host Hotels Resorts 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 Host Hotels 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 Host Hotels Resorts 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 Host Hotels i.e., Host Hotels and Games Workshop go up and down completely randomly.

Pair Corralation between Host Hotels and Games Workshop

Assuming the 90 days trading horizon Host Hotels Resorts is expected to under-perform the Games Workshop. But the stock apears to be less risky and, when comparing its historical volatility, Host Hotels Resorts is 1.09 times less risky than Games Workshop. The stock trades about -0.16 of its potential returns per unit of risk. The Games Workshop Group is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,389,254  in Games Workshop Group on November 29, 2024 and sell it today you would earn a total of  53,746  from holding Games Workshop Group or generate 3.87% return on investment over 90 days.

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

Host Hotels Resorts  vs.  Games Workshop Group

Host Hotels Resorts

Risk-Adjusted Performance

Very Weak

Over the last 90 days Host Hotels Resorts has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in March 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Games Workshop Group

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Games Workshop Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Games Workshop is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Host Hotels and Games Workshop

The main advantage of trading using opposite Host Hotels and Games Workshop positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Host Hotels 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 Host Hotels Resorts 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.