Correlation Between Goodheart Willcox and Burnham Holdings

Can any of the company-specific risk be diversified away by investing in both Goodheart Willcox and Burnham 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 Goodheart Willcox and Burnham Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Goodheart Willcox and Burnham Holdings

-0.25

Correlation Coefficient

Goodheart Willcox  Burnham Holdings

Very good diversification

The 3 months correlation between Goodheart and Burnham is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding The Goodheart Willcox and Burnham Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Burnham Holdings and Goodheart Willcox 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 The Goodheart Willcox are associated (or correlated) with Burnham Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Burnham Holdings has no effect on the direction of Goodheart Willcox i.e., Goodheart Willcox and Burnham Holdings go up and down completely randomly.

Pair Corralation between Goodheart Willcox and Burnham Holdings

Given the investment horizon of 90 days The Goodheart Willcox is expected to generate 1.25 times more return on investment than Burnham Holdings. However, Goodheart Willcox is 1.25 times more volatile than Burnham Holdings. It trades about 0.03 of its potential returns per unit of risk. Burnham Holdings is currently generating about 0.02 per unit of risk. If you would invest  42,000  in The Goodheart Willcox on September 26, 2024 and sell it today you would earn a total of  1,500  from holding The Goodheart Willcox or generate 3.57% return on investment over 90 days.

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

The Goodheart Willcox  vs.  Burnham Holdings

Goodheart Willcox

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in The Goodheart Willcox are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Goodheart Willcox is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Burnham Holdings

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Burnham Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental indicators, Burnham Holdings is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Goodheart Willcox and Burnham Holdings

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

The idea behind The Goodheart Willcox and Burnham 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.