Correlation Between Good Times and E Home

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

By analyzing existing cross correlation between Good Times Restaurants and E Home Household Service, you can compare the effects of market volatilities on Good Times and E Home 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 Good Times with a short position of E Home. Check out your portfolio center. Please also check ongoing floating volatility patterns of Good Times and E Home.

Diversification Opportunities for Good Times and E Home

0.57

Correlation Coefficient

Good Times  E Home

Very weak diversification

The 3 months correlation between Good and EJH is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Good Times Restaurants and E Home Household Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on E Home Household and Good Times 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 Good Times Restaurants are associated (or correlated) with E Home. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of E Home Household has no effect on the direction of Good Times i.e., Good Times and E Home go up and down completely randomly.

Pair Corralation between Good Times and E Home

Given the investment horizon of 90 days Good Times Restaurants is expected to generate 0.32 times more return on investment than E Home. However, Good Times Restaurants is 3.09 times less risky than E Home. It trades about -0.12 of its potential returns per unit of risk. E Home Household Service is currently generating about -0.3 per unit of risk. If you would invest  274.00  in Good Times Restaurants on September 14, 2024 and sell it today you would lose (9.00) from holding Good Times Restaurants or give up 3.28% of portfolio value over 90 days.

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

Good Times Restaurants  vs.  E Home Household Service

Good Times Restaurants

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Good Times Restaurants has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's forward indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

E Home Household

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days E Home Household Service has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's forward-looking indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Good Times and E Home

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

The idea behind Good Times Restaurants and E Home Household Service 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.