Correlation Between Games Workshop and GFL ENVIRONM

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

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

Diversification Opportunities for Games Workshop and GFL ENVIRONM

0.88

Correlation Coefficient

Games Workshop  GFL ENVIRONM

Very poor diversification

The 3 months correlation between Games and GFL is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Games Workshop Group and GFL ENVIRONM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GFL ENVIRONM and Games Workshop 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 Games Workshop Group are associated (or correlated) with GFL ENVIRONM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GFL ENVIRONM has no effect on the direction of Games Workshop i.e., Games Workshop and GFL ENVIRONM go up and down completely randomly.

Pair Corralation between Games Workshop and GFL ENVIRONM

Assuming the 90 days trading horizon Games Workshop Group is expected to under-perform the GFL ENVIRONM. In addition to that, Games Workshop is 1.54 times more volatile than GFL ENVIRONM. It trades about -0.01 of its total potential returns per unit of risk. GFL ENVIRONM is currently generating about -0.01 per unit of volatility. If you would invest  4,360  in GFL ENVIRONM on September 26, 2024 and sell it today you would lose (20.00) from holding GFL ENVIRONM or give up 0.46% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Games Workshop Group  vs.  GFL ENVIRONM

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 comparatively uncertain basic indicators, Games Workshop unveiled solid returns over the last few months and may actually be approaching a breakup point.

GFL ENVIRONM

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GFL ENVIRONM are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, GFL ENVIRONM reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Games Workshop and GFL ENVIRONM

The main advantage of trading using opposite Games Workshop and GFL ENVIRONM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Games Workshop position performs unexpectedly, GFL ENVIRONM 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 GFL ENVIRONM will offset losses from the drop in GFL ENVIRONM's long position.

The idea behind Games Workshop Group and GFL ENVIRONM 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.