Correlation Between Games Workshop and SunOpta

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

Diversification Opportunities for Games Workshop and SunOpta

-0.24

Correlation Coefficient

Games Workshop  SunOpta

Very good diversification

The 3 months correlation between Games and SunOpta is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Games Workshop Group and SunOpta in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SunOpta 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 SunOpta. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SunOpta has no effect on the direction of Games Workshop i.e., Games Workshop and SunOpta go up and down completely randomly.

Pair Corralation between Games Workshop and SunOpta

Assuming the 90 days horizon Games Workshop Group is expected to generate 0.88 times more return on investment than SunOpta. However, Games Workshop Group is 1.13 times less risky than SunOpta. It trades about 0.08 of its potential returns per unit of risk. SunOpta is currently generating about -0.2 per unit of risk. If you would invest  16,800  in Games Workshop Group on December 21, 2024 and sell it today you would earn a total of  1,500  from holding Games Workshop Group or generate 8.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	88.14%
Values	Daily Returns

Games Workshop Group  vs.  SunOpta

Games Workshop Group

Risk-Adjusted Performance

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 may actually be approaching a critical reversion point that can send shares even higher in April 2025.

SunOpta

Risk-Adjusted Performance

Very Weak

Over the last 90 days SunOpta has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Games Workshop and SunOpta

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

The idea behind Games Workshop Group and SunOpta 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.