Correlation Between Henderson Land and Gould Investors

Can any of the company-specific risk be diversified away by investing in both Henderson Land and Gould Investors 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 Henderson Land and Gould Investors into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Henderson Land and Gould Investors LP, you can compare the effects of market volatilities on Henderson Land and Gould Investors 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 Henderson Land with a short position of Gould Investors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Henderson Land and Gould Investors.

Diversification Opportunities for Henderson Land and Gould Investors

-0.6

Correlation Coefficient

Henderson Land  Gould Investors

Excellent diversification

The 3 months correlation between Henderson and Gould is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Henderson Land and Gould Investors LP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gould Investors LP and Henderson Land 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 Henderson Land are associated (or correlated) with Gould Investors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gould Investors LP has no effect on the direction of Henderson Land i.e., Henderson Land and Gould Investors go up and down completely randomly.

Pair Corralation between Henderson Land and Gould Investors

If you would invest  38,000  in Gould Investors LP on October 11, 2024 and sell it today you would earn a total of  2,000  from holding Gould Investors LP or generate 5.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	1.59%
Values	Daily Returns

Henderson Land  vs.  Gould Investors LP

Henderson Land

Risk-Adjusted Performance

0 of 100

Very Weak

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

Gould Investors LP

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Gould Investors LP are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Gould Investors may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Henderson Land and Gould Investors

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

The idea behind Henderson Land and Gould Investors LP 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.