Correlation Between Real Good and Simply Good

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

By analyzing existing cross correlation between Real Good Food and Simply Good Foods, you can compare the effects of market volatilities on Real Good and Simply Good 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 Real Good with a short position of Simply Good. Check out your portfolio center. Please also check ongoing floating volatility patterns of Real Good and Simply Good.

Diversification Opportunities for Real Good and Simply Good

0.44

Correlation Coefficient

Real Good  Simply Good

Very weak diversification

The 3 months correlation between Real and Simply is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Real Good Food and Simply Good Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simply Good Foods and Real Good 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 Real Good Food are associated (or correlated) with Simply Good. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simply Good Foods has no effect on the direction of Real Good i.e., Real Good and Simply Good go up and down completely randomly.

Pair Corralation between Real Good and Simply Good

Considering the 90-day investment horizon Real Good Food is expected to generate 121.19 times more return on investment than Simply Good. However, Real Good is 121.19 times more volatile than Simply Good Foods. It trades about 0.42 of its potential returns per unit of risk. Simply Good Foods is currently generating about 0.07 per unit of risk. If you would invest  4.00  in Real Good Food on December 11, 2024 and sell it today you would earn a total of  10.00  from holding Real Good Food or generate 250.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	12.5%
Values	Daily Returns

Real Good Food  vs.  Simply Good Foods

Real Good Food

Risk-Adjusted Performance

OK

Over the last 90 days Real Good Food has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly weak technical and fundamental indicators, Real Good reported solid returns over the last few months and may actually be approaching a breakup point.

Simply Good Foods

Risk-Adjusted Performance

Very Weak

Over the last 90 days Simply Good Foods has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Real Good and Simply Good

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

The idea behind Real Good Food and Simply Good 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.