Correlation Between CLS Holdings and Goodness Growth

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

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

Diversification Opportunities for CLS Holdings and Goodness Growth

0.07

Correlation Coefficient

CLS Holdings  Goodness Growth

Significant diversification

The 3 months correlation between CLS and Goodness is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding CLS Holdings USA and Goodness Growth Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goodness Growth Holdings and CLS Holdings 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 CLS Holdings USA are associated (or correlated) with Goodness Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goodness Growth Holdings has no effect on the direction of CLS Holdings i.e., CLS Holdings and Goodness Growth go up and down completely randomly.

Pair Corralation between CLS Holdings and Goodness Growth

Given the investment horizon of 90 days CLS Holdings USA is expected to generate 1.97 times more return on investment than Goodness Growth. However, CLS Holdings is 1.97 times more volatile than Goodness Growth Holdings. It trades about 0.06 of its potential returns per unit of risk. Goodness Growth Holdings is currently generating about 0.0 per unit of risk. If you would invest  3.05  in CLS Holdings USA on December 28, 2024 and sell it today you would lose (0.05) from holding CLS Holdings USA or give up 1.64% of portfolio value over 90 days.

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

CLS Holdings USA  vs.  Goodness Growth Holdings

CLS Holdings USA

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CLS Holdings USA are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile basic indicators, CLS Holdings demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Goodness Growth Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Goodness Growth Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Goodness Growth is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with CLS Holdings and Goodness Growth

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

The idea behind CLS Holdings USA and Goodness Growth Holdings 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.