Correlation Between Goodfellow and TVA

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

By analyzing existing cross correlation between Goodfellow and TVA Group, you can compare the effects of market volatilities on Goodfellow and TVA 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 TVA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goodfellow and TVA.

Diversification Opportunities for Goodfellow and TVA

0.41

Correlation Coefficient

Goodfellow  TVA

Very weak diversification

The 3 months correlation between Goodfellow and TVA is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Goodfellow and TVA Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TVA Group 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 TVA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TVA Group has no effect on the direction of Goodfellow i.e., Goodfellow and TVA go up and down completely randomly.

Pair Corralation between Goodfellow and TVA

Assuming the 90 days trading horizon Goodfellow is expected to generate 0.48 times more return on investment than TVA. However, Goodfellow is 2.1 times less risky than TVA. It trades about -0.04 of its potential returns per unit of risk. TVA Group is currently generating about -0.06 per unit of risk. If you would invest  1,472  in Goodfellow on September 4, 2024 and sell it today you would lose (83.00) from holding Goodfellow or give up 5.64% of portfolio value over 90 days.

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

Goodfellow  vs.  TVA Group

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 very healthy essential indicators, Goodfellow is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

TVA Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TVA Group 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 comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Goodfellow and TVA

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

The idea behind Goodfellow and TVA 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.

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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.