Correlation Between Stella Jones and Goodfellow
Can any of the company-specific risk be diversified away by investing in both Stella Jones and Goodfellow 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 Stella Jones and Goodfellow into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stella Jones and Goodfellow, you can compare the effects of market volatilities on Stella Jones and Goodfellow 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 Stella Jones with a short position of Goodfellow. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stella Jones and Goodfellow.
Diversification Opportunities for Stella Jones and Goodfellow
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Stella and Goodfellow is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Stella Jones and Goodfellow in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goodfellow and Stella Jones 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 Stella Jones are associated (or correlated) with Goodfellow. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goodfellow has no effect on the direction of Stella Jones i.e., Stella Jones and Goodfellow go up and down completely randomly.
Pair Corralation between Stella Jones and Goodfellow
Assuming the 90 days horizon Stella Jones is expected to under-perform the Goodfellow. In addition to that, Stella Jones is 1.33 times more volatile than Goodfellow. It trades about -0.01 of its total potential returns per unit of risk. Goodfellow is currently generating about 0.02 per unit of volatility. If you would invest 1,333 in Goodfellow on September 3, 2024 and sell it today you would earn a total of 56.00 from holding Goodfellow or generate 4.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Stella Jones vs. Goodfellow
Performance |
| Timeline |
| Stella Jones |
| Goodfellow |
Stella Jones and Goodfellow Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stella Jones and Goodfellow
The main advantage of trading using opposite Stella Jones and Goodfellow positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stella Jones position performs unexpectedly, Goodfellow 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 Goodfellow will offset losses from the drop in Goodfellow's long position.| Stella Jones vs. Richelieu Hardware | Stella Jones vs. CCL Industries | Stella Jones vs. Stantec | Stella Jones vs. Gildan Activewear |
| Goodfellow vs. Algoma Central | Goodfellow vs. Taiga Building Products | Goodfellow vs. Conifex Timber | Goodfellow vs. Acadian Timber Corp |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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