Correlation Between Games Workshop and Enbridge

Can any of the company-specific risk be diversified away by investing in both Games Workshop and Enbridge 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 Enbridge 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 Enbridge, you can compare the effects of market volatilities on Games Workshop and Enbridge 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 Enbridge. Check out your portfolio center. Please also check ongoing floating volatility patterns of Games Workshop and Enbridge.

Diversification Opportunities for Games Workshop and Enbridge

0.77

Correlation Coefficient

Games Workshop  Enbridge

Poor diversification

The 3 months correlation between Games and Enbridge is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Games Workshop Group and Enbridge in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enbridge 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 Enbridge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enbridge has no effect on the direction of Games Workshop i.e., Games Workshop and Enbridge go up and down completely randomly.

Pair Corralation between Games Workshop and Enbridge

Assuming the 90 days trading horizon Games Workshop Group is expected to under-perform the Enbridge. In addition to that, Games Workshop is 2.06 times more volatile than Enbridge. It trades about -0.17 of its total potential returns per unit of risk. Enbridge is currently generating about 0.66 per unit of volatility. If you would invest  5,914  in Enbridge on October 17, 2024 and sell it today you would earn a total of  481.00  from holding Enbridge or generate 8.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	65.0%
Values	Daily Returns

Games Workshop Group  vs.  Enbridge

Games Workshop Group

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Games Workshop Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Games Workshop may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Enbridge

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Enbridge are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Enbridge unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Games Workshop and Enbridge

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

The idea behind Games Workshop Group and Enbridge 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.