Correlation Between Games Workshop and Western Midstream

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

Diversification Opportunities for Games Workshop and Western Midstream

0.56

Correlation Coefficient

Games Workshop  Western Midstream

Very weak diversification

The 3 months correlation between Games and Western is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Games Workshop Group and Western Midstream Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western 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 Western Midstream. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Midstream has no effect on the direction of Games Workshop i.e., Games Workshop and Western Midstream go up and down completely randomly.

Pair Corralation between Games Workshop and Western Midstream

Assuming the 90 days horizon Games Workshop Group is expected to under-perform the Western Midstream. In addition to that, Games Workshop is 1.22 times more volatile than Western Midstream Partners. It trades about -0.23 of its total potential returns per unit of risk. Western Midstream Partners is currently generating about 0.0 per unit of volatility. If you would invest  3,959  in Western Midstream Partners on October 10, 2024 and sell it today you would lose (12.00) from holding Western Midstream Partners or give up 0.3% of portfolio value over 90 days.

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

Games Workshop Group  vs.  Western Midstream Partners

Games Workshop Group

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Games Workshop Group are ranked lower than 8 (%) 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.

Western Midstream

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Western Midstream Partners are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, Western Midstream is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Games Workshop and Western Midstream

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

The idea behind Games Workshop Group and Western Midstream Partners 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.

Check out your portfolio center.

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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.