Correlation Between SoftBank Group and Games Workshop
Can any of the company-specific risk be diversified away by investing in both SoftBank Group 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 SoftBank Group and Games Workshop into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SoftBank Group Corp and Games Workshop Group, you can compare the effects of market volatilities on SoftBank Group 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 SoftBank Group with a short position of Games Workshop. Check out your portfolio center. Please also check ongoing floating volatility patterns of SoftBank Group and Games Workshop.
Diversification Opportunities for SoftBank Group and Games Workshop
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SoftBank and Games is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding SoftBank Group Corp 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 SoftBank Group 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 SoftBank Group Corp 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 SoftBank Group i.e., SoftBank Group and Games Workshop go up and down completely randomly.
Pair Corralation between SoftBank Group and Games Workshop
Assuming the 90 days trading horizon SoftBank Group Corp is expected to generate 2.55 times more return on investment than Games Workshop. However, SoftBank Group is 2.55 times more volatile than Games Workshop Group. It trades about 0.04 of its potential returns per unit of risk. Games Workshop Group is currently generating about -0.33 per unit of risk. If you would invest 909,600 in SoftBank Group Corp on October 6, 2024 and sell it today you would earn a total of 8,900 from holding SoftBank Group Corp or generate 0.98% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 57.89% |
Values | Daily Returns |
SoftBank Group Corp vs. Games Workshop Group
Performance |
Timeline |
SoftBank Group Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Insignificant
Games Workshop Group |
SoftBank Group and Games Workshop Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with SoftBank Group and Games Workshop
The main advantage of trading using opposite SoftBank Group and Games Workshop positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SoftBank Group 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.SoftBank Group vs. Toyota Motor Corp | SoftBank Group vs. OTP Bank Nyrt | SoftBank Group vs. Agilent Technologies | SoftBank Group vs. Newmont Corp |
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Check out your portfolio center.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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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