Correlation Between Good Vibrations and Phoenix Footwear

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

By analyzing existing cross correlation between Good Vibrations Shoes and Phoenix Footwear Group, you can compare the effects of market volatilities on Good Vibrations and Phoenix Footwear 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 Vibrations with a short position of Phoenix Footwear. Check out your portfolio center. Please also check ongoing floating volatility patterns of Good Vibrations and Phoenix Footwear.

Diversification Opportunities for Good Vibrations and Phoenix Footwear

0.0

Correlation Coefficient

Good Vibrations  Phoenix Footwear

Pay attention - limited upside

The 3 months correlation between Good and Phoenix is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Good Vibrations Shoes and Phoenix Footwear Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Phoenix Footwear and Good Vibrations 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 Vibrations Shoes are associated (or correlated) with Phoenix Footwear. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Phoenix Footwear has no effect on the direction of Good Vibrations i.e., Good Vibrations and Phoenix Footwear go up and down completely randomly.

Pair Corralation between Good Vibrations and Phoenix Footwear

If you would invest  0.35  in Good Vibrations Shoes on December 28, 2024 and sell it today you would lose (0.02) from holding Good Vibrations Shoes or give up 5.71% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Good Vibrations Shoes  vs.  Phoenix Footwear Group

Good Vibrations Shoes

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Good Vibrations Shoes are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly abnormal basic indicators, Good Vibrations demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Phoenix Footwear

Risk-Adjusted Performance

Very Weak

Over the last 90 days Phoenix Footwear Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Phoenix Footwear is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Good Vibrations and Phoenix Footwear

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

The idea behind Good Vibrations Shoes and Phoenix Footwear 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.