Correlation Between A W and Goodfood Market
Can any of the company-specific risk be diversified away by investing in both A W and Goodfood Market 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 A W and Goodfood Market into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between A W FOOD and Goodfood Market Corp, you can compare the effects of market volatilities on A W and Goodfood Market 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 A W with a short position of Goodfood Market. Check out your portfolio center. Please also check ongoing floating volatility patterns of A W and Goodfood Market.
Diversification Opportunities for A W and Goodfood Market
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between A W and Goodfood is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding A W FOOD and Goodfood Market Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goodfood Market Corp and A W 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 A W FOOD are associated (or correlated) with Goodfood Market. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goodfood Market Corp has no effect on the direction of A W i.e., A W and Goodfood Market go up and down completely randomly.
Pair Corralation between A W and Goodfood Market
Assuming the 90 days horizon A W FOOD is expected to under-perform the Goodfood Market. But the stock apears to be less risky and, when comparing its historical volatility, A W FOOD is 11.26 times less risky than Goodfood Market. The stock trades about -0.11 of its potential returns per unit of risk. The Goodfood Market Corp is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest 30.00 in Goodfood Market Corp on September 1, 2024 and sell it today you would earn a total of 15.00 from holding Goodfood Market Corp or generate 50.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
A W FOOD vs. Goodfood Market Corp
Performance |
| Timeline |
| A W FOOD |
| Goodfood Market Corp |
A W and Goodfood Market Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with A W and Goodfood Market
The main advantage of trading using opposite A W and Goodfood Market positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if A W position performs unexpectedly, Goodfood Market 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 Goodfood Market will offset losses from the drop in Goodfood Market's long position.| A W vs. McDonalds Corp CDR | A W vs. Starbucks CDR | A W vs. Restaurant Brands International | A W vs. Restaurant Brands International |
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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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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