Correlation Between Goodness Growth and Rubicon Organics

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

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

Diversification Opportunities for Goodness Growth and Rubicon Organics

0.76

Correlation Coefficient

Goodness Growth  Rubicon Organics

Poor diversification

The 3 months correlation between Goodness and Rubicon is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Goodness Growth Holdings and Rubicon Organics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rubicon Organics and Goodness Growth 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 Goodness Growth Holdings are associated (or correlated) with Rubicon Organics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rubicon Organics has no effect on the direction of Goodness Growth i.e., Goodness Growth and Rubicon Organics go up and down completely randomly.

Pair Corralation between Goodness Growth and Rubicon Organics

Assuming the 90 days horizon Goodness Growth Holdings is expected to generate 1.29 times more return on investment than Rubicon Organics. However, Goodness Growth is 1.29 times more volatile than Rubicon Organics. It trades about -0.04 of its potential returns per unit of risk. Rubicon Organics is currently generating about -0.07 per unit of risk. If you would invest  51.00  in Goodness Growth Holdings on September 4, 2024 and sell it today you would lose (14.00) from holding Goodness Growth Holdings or give up 27.45% of portfolio value over 90 days.

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

Goodness Growth Holdings  vs.  Rubicon Organics

Goodness Growth Holdings

Risk-Adjusted Performance

0 of 100

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 weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Rubicon Organics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rubicon Organics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's forward-looking indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Goodness Growth and Rubicon Organics

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

The idea behind Goodness Growth Holdings and Rubicon Organics 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.