Correlation Between Goodfood Market and Guru Organic
Can any of the company-specific risk be diversified away by investing in both Goodfood Market and Guru Organic 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 Goodfood Market and Guru Organic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Goodfood Market Corp and Guru Organic Energy, you can compare the effects of market volatilities on Goodfood Market and Guru Organic 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 Goodfood Market with a short position of Guru Organic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goodfood Market and Guru Organic.
Diversification Opportunities for Goodfood Market and Guru Organic
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Goodfood and Guru is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Goodfood Market Corp and Guru Organic Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guru Organic Energy and Goodfood Market 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 Goodfood Market Corp are associated (or correlated) with Guru Organic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guru Organic Energy has no effect on the direction of Goodfood Market i.e., Goodfood Market and Guru Organic go up and down completely randomly.
Pair Corralation between Goodfood Market and Guru Organic
Assuming the 90 days trading horizon Goodfood Market Corp is expected to generate 0.98 times more return on investment than Guru Organic. However, Goodfood Market Corp is 1.03 times less risky than Guru Organic. It trades about 0.01 of its potential returns per unit of risk. Guru Organic Energy is currently generating about -0.01 per unit of risk. If you would invest 49.00 in Goodfood Market Corp on August 31, 2024 and sell it today you would lose (4.00) from holding Goodfood Market Corp or give up 8.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Goodfood Market Corp vs. Guru Organic Energy
Performance |
| Timeline |
| Goodfood Market Corp |
| Guru Organic Energy |
Goodfood Market and Guru Organic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Goodfood Market and Guru Organic
The main advantage of trading using opposite Goodfood Market and Guru Organic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goodfood Market position performs unexpectedly, Guru Organic 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 Guru Organic will offset losses from the drop in Guru Organic's long position.| Goodfood Market vs. Berkshire Hathaway CDR | Goodfood Market vs. JPMorgan Chase Co | Goodfood Market vs. Bank of America | Goodfood Market vs. Alphabet Inc CDR |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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