Correlation Between Teva Pharmaceutical and Goodness Growth

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

By analyzing existing cross correlation between Teva Pharmaceutical Industries and Goodness Growth Holdings, you can compare the effects of market volatilities on Teva Pharmaceutical and Goodness Growth 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 Teva Pharmaceutical with a short position of Goodness Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Teva Pharmaceutical and Goodness Growth.

Diversification Opportunities for Teva Pharmaceutical and Goodness Growth

0.55

Correlation Coefficient

Teva Pharmaceutical  Goodness Growth

Very weak diversification

The 3 months correlation between Teva and Goodness is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Teva Pharmaceutical Industries and Goodness Growth Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goodness Growth Holdings and Teva Pharmaceutical 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 Teva Pharmaceutical Industries are associated (or correlated) with Goodness Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goodness Growth Holdings has no effect on the direction of Teva Pharmaceutical i.e., Teva Pharmaceutical and Goodness Growth go up and down completely randomly.

Pair Corralation between Teva Pharmaceutical and Goodness Growth

Assuming the 90 days trading horizon Teva Pharmaceutical Industries is expected to under-perform the Goodness Growth. But the stock apears to be less risky and, when comparing its historical volatility, Teva Pharmaceutical Industries is 2.46 times less risky than Goodness Growth. The stock trades about -0.06 of its potential returns per unit of risk. The Goodness Growth Holdings is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  43.00  in Goodness Growth Holdings on December 29, 2024 and sell it today you would earn a total of  2.00  from holding Goodness Growth Holdings or generate 4.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	81.82%
Values	Daily Returns

Teva Pharmaceutical Industries  vs.  Goodness Growth Holdings

Teva Pharmaceutical

Risk-Adjusted Performance

Very Weak

Over the last 90 days Teva Pharmaceutical Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Goodness Growth Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Goodness Growth Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Teva Pharmaceutical and Goodness Growth

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

The idea behind Teva Pharmaceutical Industries and Goodness Growth Holdings 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.