Correlation Between Motorsport Gaming and Games Workshop

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

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

Diversification Opportunities for Motorsport Gaming and Games Workshop

-0.21

Correlation Coefficient

Motorsport Gaming  Games Workshop

Very good diversification

The 3 months correlation between Motorsport and Games is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Motorsport Gaming Us 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 Motorsport Gaming 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 Motorsport Gaming Us 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 Motorsport Gaming i.e., Motorsport Gaming and Games Workshop go up and down completely randomly.

Pair Corralation between Motorsport Gaming and Games Workshop

Given the investment horizon of 90 days Motorsport Gaming is expected to generate 1.28 times less return on investment than Games Workshop. In addition to that, Motorsport Gaming is 1.59 times more volatile than Games Workshop Group. It trades about 0.05 of its total potential returns per unit of risk. Games Workshop Group is currently generating about 0.1 per unit of volatility. If you would invest  14,348  in Games Workshop Group on October 10, 2024 and sell it today you would earn a total of  2,452  from holding Games Workshop Group or generate 17.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.72%
Values	Daily Returns

Motorsport Gaming Us  vs.  Games Workshop Group

Motorsport Gaming

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Motorsport Gaming Us are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very weak technical and fundamental indicators, Motorsport Gaming displayed solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with Motorsport Gaming and Games Workshop

The main advantage of trading using opposite Motorsport Gaming and Games Workshop positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Motorsport Gaming 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 Motorsport Gaming Us 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.

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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.