Correlation Between Clarus Corp and Games Workshop

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

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

Diversification Opportunities for Clarus Corp and Games Workshop

0.56

Correlation Coefficient

Clarus Corp  Games Workshop

Very weak diversification

The 3 months correlation between Clarus and Games is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Clarus 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 Clarus Corp 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 Clarus 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 Clarus Corp i.e., Clarus Corp and Games Workshop go up and down completely randomly.

Pair Corralation between Clarus Corp and Games Workshop

Given the investment horizon of 90 days Clarus Corp is expected to generate 4.63 times less return on investment than Games Workshop. In addition to that, Clarus Corp is 1.04 times more volatile than Games Workshop Group. It trades about 0.03 of its total potential returns per unit of risk. Games Workshop Group is currently generating about 0.12 per unit of volatility. If you would invest  14,348  in Games Workshop Group on October 11, 2024 and sell it today you would earn a total of  3,012  from holding Games Workshop Group or generate 20.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	96.72%
Values	Daily Returns

Clarus Corp  vs.  Games Workshop Group

Clarus Corp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Clarus Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Clarus Corp is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Games Workshop Group

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Games Workshop Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal forward-looking signals, Games Workshop reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Clarus Corp and Games Workshop

The main advantage of trading using opposite Clarus Corp and Games Workshop positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clarus Corp 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 Clarus Corp 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.