Correlation Between Wajax and Goodfellow

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

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

Diversification Opportunities for Wajax and Goodfellow

0.61

Correlation Coefficient

Wajax  Goodfellow

Poor diversification

The 3 months correlation between Wajax and Goodfellow is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Wajax and Goodfellow in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goodfellow and Wajax 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 Wajax 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 Wajax i.e., Wajax and Goodfellow go up and down completely randomly.

Pair Corralation between Wajax and Goodfellow

Assuming the 90 days trading horizon Wajax is expected to generate 1.16 times more return on investment than Goodfellow. However, Wajax is 1.16 times more volatile than Goodfellow. It trades about 0.24 of its potential returns per unit of risk. Goodfellow is currently generating about 0.04 per unit of risk. If you would invest  1,723  in Wajax on April 25, 2025 and sell it today you would earn a total of  613.00  from holding Wajax or generate 35.58% return on investment over 90 days.

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

Wajax  vs.  Goodfellow

Wajax

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Wajax are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Wajax displayed solid returns over the last few months and may actually be approaching a breakup point.

Goodfellow

Risk-Adjusted Performance

Insignificant

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 recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Wajax and Goodfellow

The main advantage of trading using opposite Wajax and Goodfellow positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wajax 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 Wajax 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.