Correlation Between Park Hotels and Games Workshop

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

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

Diversification Opportunities for Park Hotels and Games Workshop

0.87

Correlation Coefficient

Park Hotels  Games Workshop

Very poor diversification

The 3 months correlation between Park and Games is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Park Hotels Resorts 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 Park Hotels 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 Park Hotels Resorts 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 Park Hotels i.e., Park Hotels and Games Workshop go up and down completely randomly.

Pair Corralation between Park Hotels and Games Workshop

Assuming the 90 days trading horizon Park Hotels Resorts is expected to under-perform the Games Workshop. In addition to that, Park Hotels is 1.0 times more volatile than Games Workshop Group. It trades about -0.06 of its total potential returns per unit of risk. Games Workshop Group is currently generating about 0.0 per unit of volatility. If you would invest  15,730  in Games Workshop Group on September 27, 2024 and sell it today you would lose (30.00) from holding Games Workshop Group or give up 0.19% of portfolio value over 90 days.

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

Park Hotels Resorts  vs.  Games Workshop Group

Park Hotels Resorts

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Park Hotels Resorts are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Park Hotels may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Games Workshop Group

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Games Workshop Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Games Workshop unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Park Hotels and Games Workshop

The main advantage of trading using opposite Park Hotels and Games Workshop positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Park Hotels 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 Park Hotels Resorts 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.