Correlation Between Stockland and Goodman
Can any of the company-specific risk be diversified away by investing in both Stockland and Goodman 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 Stockland and Goodman into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stockland and Goodman Group, you can compare the effects of market volatilities on Stockland and Goodman 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 Stockland with a short position of Goodman. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stockland and Goodman.
Diversification Opportunities for Stockland and Goodman
Poor diversification
The 3 months correlation between Stockland and Goodman is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Stockland and Goodman Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goodman Group and Stockland 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 Stockland are associated (or correlated) with Goodman. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goodman Group has no effect on the direction of Stockland i.e., Stockland and Goodman go up and down completely randomly.
Pair Corralation between Stockland and Goodman
Assuming the 90 days horizon Stockland is expected to generate 1.13 times less return on investment than Goodman. In addition to that, Stockland is 1.67 times more volatile than Goodman Group. It trades about 0.03 of its total potential returns per unit of risk. Goodman Group is currently generating about 0.07 per unit of volatility. If you would invest 1,172 in Goodman Group on August 27, 2024 and sell it today you would earn a total of 1,053 from holding Goodman Group or generate 89.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Stockland vs. Goodman Group
Performance |
| Timeline |
| Stockland |
| Goodman Group |
Stockland and Goodman Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stockland and Goodman
The main advantage of trading using opposite Stockland and Goodman positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stockland position performs unexpectedly, Goodman 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 Goodman will offset losses from the drop in Goodman's long position.The idea behind Stockland and Goodman Group 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.| Goodman vs. British Land | Goodman vs. Global Net Lease, | Goodman vs. VICI Properties | Goodman vs. Highlands REIT |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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