Correlation Between Delta Air and Games Workshop

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

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

Diversification Opportunities for Delta Air and Games Workshop

0.62

Correlation Coefficient

Delta Air  Games Workshop

Poor diversification

The 3 months correlation between Delta and Games is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Delta Air Lines 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 Delta Air 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 Delta Air Lines 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 Delta Air i.e., Delta Air and Games Workshop go up and down completely randomly.

Pair Corralation between Delta Air and Games Workshop

Assuming the 90 days trading horizon Delta Air Lines is expected to under-perform the Games Workshop. But the stock apears to be less risky and, when comparing its historical volatility, Delta Air Lines is 1.63 times less risky than Games Workshop. The stock trades about -0.09 of its potential returns per unit of risk. The Games Workshop Group is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  1,165,000  in Games Workshop Group on October 7, 2024 and sell it today you would earn a total of  159,000  from holding Games Workshop Group or generate 13.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	97.62%
Values	Daily Returns

Delta Air Lines  vs.  Games Workshop Group

Delta Air Lines

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Delta Air Lines are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Delta Air unveiled solid returns over the last few months and may actually be approaching a breakup point.

Games Workshop Group

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Games Workshop Group are ranked lower than 10 (%) 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 Delta Air and Games Workshop

The main advantage of trading using opposite Delta Air and Games Workshop positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Delta Air 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 Delta Air Lines 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.