Correlation Between Goodfood Market and First Trust

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

By analyzing existing cross correlation between Goodfood Market Corp and First Trust Indxx, you can compare the effects of market volatilities on Goodfood Market and First Trust 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 Goodfood Market with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goodfood Market and First Trust.

Diversification Opportunities for Goodfood Market and First Trust

-0.55

Correlation Coefficient

Goodfood Market  First Trust

Excellent diversification

The 3 months correlation between Goodfood and First is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Goodfood Market Corp and First Trust Indxx in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Indxx and Goodfood Market 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 Goodfood Market Corp are associated (or correlated) with First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust Indxx has no effect on the direction of Goodfood Market i.e., Goodfood Market and First Trust go up and down completely randomly.

Pair Corralation between Goodfood Market and First Trust

Assuming the 90 days trading horizon Goodfood Market Corp is expected to under-perform the First Trust. In addition to that, Goodfood Market is 5.28 times more volatile than First Trust Indxx. It trades about -0.05 of its total potential returns per unit of risk. First Trust Indxx is currently generating about 0.04 per unit of volatility. If you would invest  1,197  in First Trust Indxx on December 30, 2024 and sell it today you would earn a total of  24.00  from holding First Trust Indxx or generate 2.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Goodfood Market Corp  vs.  First Trust Indxx

Goodfood Market Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Goodfood Market Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

First Trust Indxx

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in First Trust Indxx are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, First Trust is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Goodfood Market and First Trust

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

The idea behind Goodfood Market Corp and First Trust Indxx 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.