Correlation Between Goodfellow and Conifex Timber

Can any of the company-specific risk be diversified away by investing in both Goodfellow and Conifex Timber 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 Goodfellow and Conifex Timber into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Goodfellow and Conifex Timber, you can compare the effects of market volatilities on Goodfellow and Conifex Timber 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 Goodfellow with a short position of Conifex Timber. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goodfellow and Conifex Timber.

Diversification Opportunities for Goodfellow and Conifex Timber

0.3

Correlation Coefficient

Goodfellow  Conifex Timber

Weak diversification

The 3 months correlation between Goodfellow and Conifex is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Goodfellow and Conifex Timber in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Conifex Timber and Goodfellow 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 Goodfellow are associated (or correlated) with Conifex Timber. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Conifex Timber has no effect on the direction of Goodfellow i.e., Goodfellow and Conifex Timber go up and down completely randomly.

Pair Corralation between Goodfellow and Conifex Timber

Assuming the 90 days trading horizon Goodfellow is expected to generate 0.36 times more return on investment than Conifex Timber. However, Goodfellow is 2.77 times less risky than Conifex Timber. It trades about -0.07 of its potential returns per unit of risk. Conifex Timber is currently generating about -0.03 per unit of risk. If you would invest  1,446  in Goodfellow on September 27, 2024 and sell it today you would lose (135.00) from holding Goodfellow or give up 9.34% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Goodfellow  vs.  Conifex Timber

Goodfellow

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Goodfellow has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's essential indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Conifex Timber

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Conifex Timber has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's technical and fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Goodfellow and Conifex Timber

The main advantage of trading using opposite Goodfellow and Conifex Timber positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goodfellow position performs unexpectedly, Conifex Timber 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 Conifex Timber will offset losses from the drop in Conifex Timber's long position.

The idea behind Goodfellow and Conifex Timber 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.

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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.