Correlation Between Drive Shack and Games Workshop

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

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

Diversification Opportunities for Drive Shack and Games Workshop

-0.37

Correlation Coefficient

Drive Shack  Games Workshop

Very good diversification

The 3 months correlation between Drive and Games is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Drive Shack 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 Drive Shack 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 Drive Shack 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 Drive Shack i.e., Drive Shack and Games Workshop go up and down completely randomly.

Pair Corralation between Drive Shack and Games Workshop

If you would invest  15,726  in Games Workshop Group on October 26, 2024 and sell it today you would earn a total of  1,783  from holding Games Workshop Group or generate 11.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	1.69%
Values	Daily Returns

Drive Shack  vs.  Games Workshop Group

Drive Shack

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Drive Shack has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent technical indicators, Drive Shack is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Games Workshop Group

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Games Workshop Group are ranked lower than 5 (%) 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 Drive Shack and Games Workshop

The main advantage of trading using opposite Drive Shack and Games Workshop positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Drive Shack 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 Drive Shack 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.