Correlation Between Retail Opportunity and Goodheart Willcox

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

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

Diversification Opportunities for Retail Opportunity and Goodheart Willcox

-0.53

Correlation Coefficient

Retail Opportunity  Goodheart Willcox

Excellent diversification

The 3 months correlation between Retail and Goodheart is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Retail Opportunity Investments and The Goodheart Willcox in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goodheart Willcox and Retail Opportunity 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 Retail Opportunity Investments are associated (or correlated) with Goodheart Willcox. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goodheart Willcox has no effect on the direction of Retail Opportunity i.e., Retail Opportunity and Goodheart Willcox go up and down completely randomly.

Pair Corralation between Retail Opportunity and Goodheart Willcox

Given the investment horizon of 90 days Retail Opportunity is expected to generate 18.02 times less return on investment than Goodheart Willcox. But when comparing it to its historical volatility, Retail Opportunity Investments is 31.68 times less risky than Goodheart Willcox. It trades about 0.22 of its potential returns per unit of risk. The Goodheart Willcox is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  40,000  in The Goodheart Willcox on September 25, 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	Very Weak
Accuracy	95.24%
Values	Daily Returns

Retail Opportunity Investments  vs.  The Goodheart Willcox

Retail Opportunity

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Retail Opportunity Investments are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile forward indicators, Retail Opportunity may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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.

Pair Trading with Retail Opportunity and Goodheart Willcox

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

The idea behind Retail Opportunity Investments and The Goodheart Willcox 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 Commodity Directory module to find actively traded commodities issued by global exchanges.