Correlation Between Intermediate Capital and Games Workshop

Can any of the company-specific risk be diversified away by investing in both Intermediate Capital and Games Workshop 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 Intermediate Capital and Games Workshop into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Intermediate Capital Group and Games Workshop Group, you can compare the effects of market volatilities on Intermediate Capital and Games Workshop 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 Intermediate Capital with a short position of Games Workshop. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intermediate Capital and Games Workshop.

Diversification Opportunities for Intermediate Capital and Games Workshop

-0.36

Correlation Coefficient

Intermediate Capital  Games Workshop

Very good diversification

The 3 months correlation between Intermediate and Games is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Intermediate Capital Group and Games Workshop Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Games Workshop Group and Intermediate Capital 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 Intermediate Capital Group are associated (or correlated) with Games Workshop. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Games Workshop Group has no effect on the direction of Intermediate Capital i.e., Intermediate Capital and Games Workshop go up and down completely randomly.

Pair Corralation between Intermediate Capital and Games Workshop

Assuming the 90 days trading horizon Intermediate Capital is expected to generate 1.14 times less return on investment than Games Workshop. But when comparing it to its historical volatility, Intermediate Capital Group is 1.0 times less risky than Games Workshop. It trades about 0.07 of its potential returns per unit of risk. Games Workshop Group is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  692,358  in Games Workshop Group on September 3, 2024 and sell it today you would earn a total of  720,642  from holding Games Workshop Group or generate 104.09% return on investment over 90 days.

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

Intermediate Capital Group  vs.  Games Workshop Group

Intermediate Capital

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Intermediate Capital Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Intermediate Capital is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Games Workshop Group

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Games Workshop Group are ranked lower than 16 (%) 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.

Pair Trading with Intermediate Capital and Games Workshop

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

The idea behind Intermediate Capital Group and Games Workshop Group 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.