Correlation Between Games Workshop and Lincoln Educational

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

Diversification Opportunities for Games Workshop and Lincoln Educational

0.46

Correlation Coefficient

Games Workshop  Lincoln Educational

Very weak diversification

The 3 months correlation between Games and Lincoln is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Games Workshop Group and Lincoln Educational Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lincoln Educational 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 Lincoln Educational. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lincoln Educational has no effect on the direction of Games Workshop i.e., Games Workshop and Lincoln Educational go up and down completely randomly.

Pair Corralation between Games Workshop and Lincoln Educational

Assuming the 90 days horizon Games Workshop is expected to generate 1.73 times less return on investment than Lincoln Educational. In addition to that, Games Workshop is 1.26 times more volatile than Lincoln Educational Services. It trades about 0.08 of its total potential returns per unit of risk. Lincoln Educational Services is currently generating about 0.17 per unit of volatility. If you would invest  1,242  in Lincoln Educational Services on October 25, 2024 and sell it today you would earn a total of  352.50  from holding Lincoln Educational Services or generate 28.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	96.67%
Values	Daily Returns

Games Workshop Group  vs.  Lincoln Educational Services

Games Workshop Group

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Games Workshop Group are ranked lower than 6 (%) 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.

Lincoln Educational

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Lincoln Educational Services are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Lincoln Educational exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Games Workshop and Lincoln Educational

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

The idea behind Games Workshop Group and Lincoln Educational Services 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.