Correlation Between Caldwell Partners and Goodfellow

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

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

Diversification Opportunities for Caldwell Partners and Goodfellow

-0.09

Correlation Coefficient

Caldwell Partners  Goodfellow

Good diversification

The 3 months correlation between Caldwell and Goodfellow is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Caldwell Partners Internationa and Goodfellow in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goodfellow and Caldwell Partners 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 Caldwell Partners International 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 Caldwell Partners i.e., Caldwell Partners and Goodfellow go up and down completely randomly.

Pair Corralation between Caldwell Partners and Goodfellow

Assuming the 90 days trading horizon Caldwell Partners International is expected to generate 1.54 times more return on investment than Goodfellow. However, Caldwell Partners is 1.54 times more volatile than Goodfellow. It trades about 0.2 of its potential returns per unit of risk. Goodfellow is currently generating about -0.14 per unit of risk. If you would invest  68.00  in Caldwell Partners International on February 6, 2024 and sell it today you would earn a total of  10.00  from holding Caldwell Partners International or generate 14.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Caldwell Partners Internationa  vs.  Goodfellow

Caldwell Partners

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Caldwell Partners International are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating essential indicators, Caldwell Partners may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Goodfellow

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Goodfellow are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy essential indicators, Goodfellow is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Caldwell Partners and Goodfellow

The main advantage of trading using opposite Caldwell Partners and Goodfellow positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caldwell Partners 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 Caldwell Partners International 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.

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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.