Correlation Between Goodheart Willcox and Hanover Foods

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

Diversification Opportunities for Goodheart Willcox and Hanover Foods

-0.16

Correlation Coefficient

Goodheart Willcox  Hanover Foods

Good diversification

The 3 months correlation between Goodheart and Hanover is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding The Goodheart Willcox and Hanover Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanover Foods 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 Hanover Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hanover Foods has no effect on the direction of Goodheart Willcox i.e., Goodheart Willcox and Hanover Foods go up and down completely randomly.

Pair Corralation between Goodheart Willcox and Hanover Foods

If you would invest  40,000  in The Goodheart Willcox on September 26, 2024 and sell it today you would earn a total of  3,500  from holding The Goodheart Willcox or generate 8.75% 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.  Hanover Foods

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.

Hanover Foods

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hanover Foods has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Hanover Foods 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 Hanover Foods

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

The idea behind The Goodheart Willcox and Hanover Foods 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.