Correlation Between Goodman and Stockland
Can any of the company-specific risk be diversified away by investing in both Goodman and Stockland 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 Goodman and Stockland into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Goodman Group and Stockland, you can compare the effects of market volatilities on Goodman and Stockland 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 Goodman with a short position of Stockland. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goodman and Stockland.
Diversification Opportunities for Goodman and Stockland
Poor diversification
The 3 months correlation between Goodman and Stockland is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Goodman Group and Stockland in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stockland and Goodman 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 Goodman Group are associated (or correlated) with Stockland. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stockland has no effect on the direction of Goodman i.e., Goodman and Stockland go up and down completely randomly.
Pair Corralation between Goodman and Stockland
Assuming the 90 days horizon Goodman Group is expected to generate 1.54 times more return on investment than Stockland. However, Goodman is 1.54 times more volatile than Stockland. It trades about 0.01 of its potential returns per unit of risk. Stockland is currently generating about 0.01 per unit of risk. If you would invest 2,305 in Goodman Group on August 24, 2024 and sell it today you would lose (80.00) from holding Goodman Group or give up 3.47% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.4% |
| Values | Daily Returns |
Goodman Group vs. Stockland
Performance |
| Timeline |
| Goodman Group |
| Stockland |
Goodman and Stockland Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Goodman and Stockland
The main advantage of trading using opposite Goodman and Stockland positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goodman position performs unexpectedly, Stockland 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 Stockland will offset losses from the drop in Stockland's long position.| Goodman vs. Comstock Holding Companies | Goodman vs. St Joe Company | Goodman vs. Stratus Properties | Goodman vs. Mitsui Fudosan Co |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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