Correlation Between Cargojet and Good Natured
Can any of the company-specific risk be diversified away by investing in both Cargojet and Good Natured 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 Cargojet and Good Natured into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cargojet and Good Natured Products, you can compare the effects of market volatilities on Cargojet and Good Natured 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 Cargojet with a short position of Good Natured. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cargojet and Good Natured.
Diversification Opportunities for Cargojet and Good Natured
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Cargojet and Good is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Cargojet and Good Natured Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Good Natured Products and Cargojet 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 Cargojet are associated (or correlated) with Good Natured. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Good Natured Products has no effect on the direction of Cargojet i.e., Cargojet and Good Natured go up and down completely randomly.
Pair Corralation between Cargojet and Good Natured
Assuming the 90 days trading horizon Cargojet is expected to generate 0.33 times more return on investment than Good Natured. However, Cargojet is 3.05 times less risky than Good Natured. It trades about 0.08 of its potential returns per unit of risk. Good Natured Products is currently generating about -0.08 per unit of risk. If you would invest 11,633 in Cargojet on February 7, 2024 and sell it today you would earn a total of 369.00 from holding Cargojet or generate 3.17% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Cargojet vs. Good Natured Products
Performance |
Timeline |
Cargojet |
Good Natured Products |
Cargojet and Good Natured Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Cargojet and Good Natured
The main advantage of trading using opposite Cargojet and Good Natured positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cargojet position performs unexpectedly, Good Natured 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 Good Natured will offset losses from the drop in Good Natured's long position.The idea behind Cargojet and Good Natured Products 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.Good Natured vs. High Liner Foods | Good Natured vs. Tree Island Steel | Good Natured vs. Chesswood Group Limited | Good Natured vs. Hammond Power Solutions |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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