Correlation Between Rubicon Organics and Goodfellow

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

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

Diversification Opportunities for Rubicon Organics and Goodfellow

-0.18

Correlation Coefficient

Rubicon Organics  Goodfellow

Good diversification

The 3 months correlation between Rubicon and Goodfellow is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Rubicon Organics and Goodfellow in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goodfellow and Rubicon Organics 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 Rubicon Organics are associated (or correlated) with Goodfellow. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goodfellow has no effect on the direction of Rubicon Organics i.e., Rubicon Organics and Goodfellow go up and down completely randomly.

Pair Corralation between Rubicon Organics and Goodfellow

Assuming the 90 days trading horizon Rubicon Organics is expected to generate 4.21 times more return on investment than Goodfellow. However, Rubicon Organics is 4.21 times more volatile than Goodfellow. It trades about 0.03 of its potential returns per unit of risk. Goodfellow is currently generating about 0.02 per unit of risk. If you would invest  53.00  in Rubicon Organics on October 4, 2024 and sell it today you would lose (5.00) from holding Rubicon Organics or give up 9.43% of portfolio value over 90 days.

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

Rubicon Organics  vs.  Goodfellow

Rubicon Organics

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Rubicon Organics are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal primary indicators, Rubicon Organics showed solid returns over the last few months and may actually be approaching a breakup point.

Goodfellow

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Goodfellow has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's essential indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Rubicon Organics and Goodfellow

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

The idea behind Rubicon Organics and Goodfellow 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.