Correlation Between Teradyne and Games Workshop

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

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

Diversification Opportunities for Teradyne and Games Workshop

-0.55

Correlation Coefficient

Teradyne  Games Workshop

Excellent diversification

The 3 months correlation between Teradyne and Games is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Teradyne 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 Teradyne 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 Teradyne 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 Teradyne i.e., Teradyne and Games Workshop go up and down completely randomly.

Pair Corralation between Teradyne and Games Workshop

Considering the 90-day investment horizon Teradyne is expected to under-perform the Games Workshop. In addition to that, Teradyne is 1.32 times more volatile than Games Workshop Group. It trades about -0.16 of its total potential returns per unit of risk. Games Workshop Group is currently generating about 0.08 per unit of volatility. If you would invest  16,800  in Games Workshop Group on December 20, 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	Very Weak
Accuracy	86.44%
Values	Daily Returns

Teradyne  vs.  Games Workshop Group

Teradyne

Risk-Adjusted Performance

Very Weak

Over the last 90 days Teradyne has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's technical and fundamental indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

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.

Pair Trading with Teradyne and Games Workshop

The main advantage of trading using opposite Teradyne and Games Workshop positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Teradyne 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 Teradyne 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.