Correlation Between Games Workshop and General Motors

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

Diversification Opportunities for Games Workshop and General Motors

0.61

Correlation Coefficient

Games Workshop  General Motors

Poor diversification

The 3 months correlation between Games and General is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Games Workshop Group and General Motors Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General Motors 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 General Motors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of General Motors has no effect on the direction of Games Workshop i.e., Games Workshop and General Motors go up and down completely randomly.

Pair Corralation between Games Workshop and General Motors

Assuming the 90 days trading horizon Games Workshop Group is expected to generate 0.89 times more return on investment than General Motors. However, Games Workshop Group is 1.12 times less risky than General Motors. It trades about 0.06 of its potential returns per unit of risk. General Motors Co is currently generating about 0.04 per unit of risk. If you would invest  872,296  in Games Workshop Group on September 26, 2024 and sell it today you would earn a total of  449,704  from holding Games Workshop Group or generate 51.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.16%
Values	Daily Returns

Games Workshop Group  vs.  General Motors Co

Games Workshop Group

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Games Workshop Group are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Games Workshop exhibited solid returns over the last few months and may actually be approaching a breakup point.

General Motors

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in General Motors Co are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, General Motors unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Games Workshop and General Motors

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

The idea behind Games Workshop Group and General Motors Co 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.