Correlation Between Live Nation and Games Workshop

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

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

Diversification Opportunities for Live Nation and Games Workshop

0.9

Correlation Coefficient

Live Nation  Games Workshop

Almost no diversification

The 3 months correlation between Live and Games is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Live Nation Entertainment 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 Live Nation 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 Live Nation Entertainment 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 Live Nation i.e., Live Nation and Games Workshop go up and down completely randomly.

Pair Corralation between Live Nation and Games Workshop

Assuming the 90 days trading horizon Live Nation is expected to generate 1.11 times less return on investment than Games Workshop. In addition to that, Live Nation is 1.02 times more volatile than Games Workshop Group. It trades about 0.07 of its total potential returns per unit of risk. Games Workshop Group is currently generating about 0.08 per unit of volatility. If you would invest  692,358  in Games Workshop Group on September 3, 2024 and sell it today you would earn a total of  720,642  from holding Games Workshop Group or generate 104.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	99.8%
Values	Daily Returns

Live Nation Entertainment  vs.  Games Workshop Group

Live Nation Entertainment

Risk-Adjusted Performance

27 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Live Nation Entertainment are ranked lower than 27 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Live Nation unveiled solid returns over the last few months and may actually be approaching a breakup point.

Games Workshop Group

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Games Workshop Group are ranked lower than 16 (%) 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 Live Nation and Games Workshop

The main advantage of trading using opposite Live Nation and Games Workshop positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Live Nation 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 Live Nation Entertainment 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.