Correlation Between Goodness Growth and StateHouse Holdings

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

Diversification Opportunities for Goodness Growth and StateHouse Holdings

0.41

Correlation Coefficient

Goodness Growth  StateHouse Holdings

Very weak diversification

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

Pair Corralation between Goodness Growth and StateHouse Holdings

Assuming the 90 days horizon Goodness Growth Holdings is expected to under-perform the StateHouse Holdings. But the otc stock apears to be less risky and, when comparing its historical volatility, Goodness Growth Holdings is 1.65 times less risky than StateHouse Holdings. The otc stock trades about -0.04 of its potential returns per unit of risk. The StateHouse Holdings is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  2.00  in StateHouse Holdings on September 4, 2024 and sell it today you would lose (0.50) from holding StateHouse Holdings or give up 25.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

Goodness Growth Holdings  vs.  StateHouse Holdings

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.

StateHouse Holdings

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in StateHouse Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, StateHouse Holdings reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Goodness Growth and StateHouse Holdings

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

The idea behind Goodness Growth Holdings and StateHouse 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.