Correlation Between Games Workshop and Carnival Plc

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

Diversification Opportunities for Games Workshop and Carnival Plc

-0.39
  Correlation Coefficient

Very good diversification

The 3 months correlation between Games and Carnival is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Games Workshop Group and Carnival Plc ADS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carnival Plc ADS 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 Carnival Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carnival Plc ADS has no effect on the direction of Games Workshop i.e., Games Workshop and Carnival Plc go up and down completely randomly.

Pair Corralation between Games Workshop and Carnival Plc

Assuming the 90 days horizon Games Workshop is expected to generate 33.73 times less return on investment than Carnival Plc. But when comparing it to its historical volatility, Games Workshop Group is 1.44 times less risky than Carnival Plc. It trades about 0.01 of its potential returns per unit of risk. Carnival Plc ADS is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  1,458  in Carnival Plc ADS on December 29, 2023 and sell it today you would earn a total of  104.00  from holding Carnival Plc ADS or generate 7.13% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy95.65%
ValuesDaily Returns

Games Workshop Group  vs.  Carnival Plc ADS

 Performance 
       Timeline  
Games Workshop Group 

Risk-Adjusted Performance

1 of 100

 
Low
 
High
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Games Workshop Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable forward-looking signals, Games Workshop is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.
Carnival Plc ADS 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Carnival Plc ADS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Games Workshop and Carnival Plc Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Games Workshop and Carnival Plc

The main advantage of trading using opposite Games Workshop and Carnival Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Games Workshop position performs unexpectedly, Carnival Plc 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 Carnival Plc will offset losses from the drop in Carnival Plc's long position.
The idea behind Games Workshop Group and Carnival Plc ADS 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.

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