Correlation Between Strainsforpains and Goodrx HoldingsInc

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

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

Diversification Opportunities for Strainsforpains and Goodrx HoldingsInc

-0.5

Correlation Coefficient

Strainsforpains  Goodrx HoldingsInc

Very good diversification

The 3 months correlation between Strainsforpains and Goodrx is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Strainsforpains and Goodrx HoldingsInc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goodrx HoldingsInc and Strainsforpains 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 Strainsforpains are associated (or correlated) with Goodrx HoldingsInc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goodrx HoldingsInc has no effect on the direction of Strainsforpains i.e., Strainsforpains and Goodrx HoldingsInc go up and down completely randomly.

Pair Corralation between Strainsforpains and Goodrx HoldingsInc

Given the investment horizon of 90 days Strainsforpains is expected to generate 2.31 times more return on investment than Goodrx HoldingsInc. However, Strainsforpains is 2.31 times more volatile than Goodrx HoldingsInc. It trades about 0.02 of its potential returns per unit of risk. Goodrx HoldingsInc is currently generating about 0.03 per unit of risk. If you would invest  26.00  in Strainsforpains on January 25, 2024 and sell it today you would lose (19.40) from holding Strainsforpains or give up 74.62% of portfolio value over 90 days.

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

Strainsforpains  vs.  Goodrx HoldingsInc

Strainsforpains

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Strainsforpains has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in May 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Goodrx HoldingsInc

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Goodrx HoldingsInc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Goodrx HoldingsInc may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with Strainsforpains and Goodrx HoldingsInc

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

The idea behind Strainsforpains and Goodrx HoldingsInc 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 Global Correlations module to find global opportunities by holding instruments from different markets.