Correlation Between Games Workshop and Apple

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

Diversification Opportunities for Games Workshop and Apple

0.89

Correlation Coefficient

Games Workshop  Apple

Very poor diversification

The 3 months correlation between Games and Apple is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Games Workshop Group and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc 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 Apple. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apple Inc has no effect on the direction of Games Workshop i.e., Games Workshop and Apple go up and down completely randomly.

Pair Corralation between Games Workshop and Apple

Assuming the 90 days trading horizon Games Workshop is expected to generate 1.09 times less return on investment than Apple. In addition to that, Games Workshop is 1.47 times more volatile than Apple Inc. It trades about 0.06 of its total potential returns per unit of risk. Apple Inc is currently generating about 0.1 per unit of volatility. If you would invest  12,278  in Apple Inc on September 22, 2024 and sell it today you would earn a total of  11,872  from holding Apple Inc or generate 96.69% return on investment over 90 days.

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

Games Workshop Group  vs.  Apple Inc

Games Workshop Group

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Games Workshop Group are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Games Workshop unveiled solid returns over the last few months and may actually be approaching a breakup point.

Apple Inc

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain fundamental indicators, Apple sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Games Workshop and Apple

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

The idea behind Games Workshop Group and Apple Inc 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.