Correlation Between Goodness Growth and Silver Spike

Can any of the company-specific risk be diversified away by investing in both Goodness Growth and Silver Spike 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 Silver Spike 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 Silver Spike Investment, you can compare the effects of market volatilities on Goodness Growth and Silver Spike 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 Silver Spike. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goodness Growth and Silver Spike.

Diversification Opportunities for Goodness Growth and Silver Spike

-0.67

Correlation Coefficient

Goodness Growth  Silver Spike

Excellent diversification

The 3 months correlation between Goodness and Silver is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Goodness Growth Holdings and Silver Spike Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silver Spike Investment 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 Silver Spike. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silver Spike Investment has no effect on the direction of Goodness Growth i.e., Goodness Growth and Silver Spike go up and down completely randomly.

Pair Corralation between Goodness Growth and Silver Spike

Assuming the 90 days horizon Goodness Growth Holdings is expected to generate 4.31 times more return on investment than Silver Spike. However, Goodness Growth is 4.31 times more volatile than Silver Spike Investment. It trades about 0.08 of its potential returns per unit of risk. Silver Spike Investment is currently generating about 0.1 per unit of risk. If you would invest  11.00  in Goodness Growth Holdings on September 12, 2024 and sell it today you would earn a total of  22.00  from holding Goodness Growth Holdings or generate 200.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.18%
Values	Daily Returns

Goodness Growth Holdings  vs.  Silver Spike Investment

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 fragile 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.

Silver Spike Investment

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days Silver Spike Investment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather fragile forward indicators, Silver Spike exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Goodness Growth and Silver Spike

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

The idea behind Goodness Growth Holdings and Silver Spike Investment 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.