Correlation Between Games Workshop and Summit Midstream

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

Diversification Opportunities for Games Workshop and Summit Midstream

0.19

Correlation Coefficient

Games Workshop  Summit Midstream

Average diversification

The 3 months correlation between Games and Summit is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Games Workshop Group and Summit Midstream in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Midstream 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 Summit Midstream. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Summit Midstream has no effect on the direction of Games Workshop i.e., Games Workshop and Summit Midstream go up and down completely randomly.

Pair Corralation between Games Workshop and Summit Midstream

Assuming the 90 days horizon Games Workshop is expected to generate 20.93 times less return on investment than Summit Midstream. In addition to that, Games Workshop is 1.99 times more volatile than Summit Midstream. It trades about 0.01 of its total potential returns per unit of risk. Summit Midstream is currently generating about 0.55 per unit of volatility. If you would invest  3,500  in Summit Midstream on October 24, 2024 and sell it today you would earn a total of  811.00  from holding Summit Midstream or generate 23.17% return on investment over 90 days.

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

Games Workshop Group  vs.  Summit Midstream

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.

Summit Midstream

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Summit Midstream are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain primary indicators, Summit Midstream exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Games Workshop and Summit Midstream

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

The idea behind Games Workshop Group and Summit Midstream 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 Stocks Directory module to find actively traded stocks across global markets.