Correlation Between Livermore Investments and Games Workshop

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

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

Diversification Opportunities for Livermore Investments and Games Workshop

0.74

Correlation Coefficient

Livermore Investments  Games Workshop

Poor diversification

The 3 months correlation between Livermore and Games is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Livermore Investments 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 Livermore Investments 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 Livermore Investments 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 Livermore Investments i.e., Livermore Investments and Games Workshop go up and down completely randomly.

Pair Corralation between Livermore Investments and Games Workshop

Assuming the 90 days trading horizon Livermore Investments Group is expected to generate 0.96 times more return on investment than Games Workshop. However, Livermore Investments Group is 1.04 times less risky than Games Workshop. It trades about 0.26 of its potential returns per unit of risk. Games Workshop Group is currently generating about 0.14 per unit of risk. If you would invest  3,735  in Livermore Investments Group on September 28, 2024 and sell it today you would earn a total of  1,665  from holding Livermore Investments Group or generate 44.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Livermore Investments Group  vs.  Games Workshop Group

Livermore Investments

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Livermore Investments Group are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Livermore Investments exhibited solid returns over the last few months and may actually be approaching a breakup point.

Games Workshop Group

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Games Workshop Group are ranked lower than 11 (%) 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 Livermore Investments and Games Workshop

The main advantage of trading using opposite Livermore Investments and Games Workshop positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Livermore Investments 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 Livermore Investments 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.