NAME OF COMPANY: Goodman Group FP Ordinary / Units Stapled Securi?es
PART A) and B)
Period 1: April 2020 – August 2021
Period 2: October 2021 – February 2023
CODE: GMG
PART C)
MEAN:
An analysis of the mean (average) returns of Goodman Group (GMG) in rela?on to the All Ordinaries (AORD)
indicated that GMG had a higher return on stock at ~3.27 when compared to AORD at ~1.78 3 for Period 1.
However, during the second period, AORD indicated slight beWer returns than GMG at -0.328 and -0.395
respec?vely.
STANDARD DEVIATION (stdev):
Standard devia?on is commonly used to assess the vola?lity of the market. Analysis of the date will indicate
how widely dispersed the values are from the average market price.
An analysis of the first period indicated that when compared to AORD, GMG showed more vola?lity with a
standard devia?on of 7.025 compared to 2.094 for AORD. When assessing the date from the second period,
GMG remained increasingly more vola?le at 11.386 compared to AORD at 5.139. This may have been
aWributed to environmental impacts such as the COVID pandemic coupled with infla?on.
VARIANCE:
Variance is used to measure the degree of variability within a set of data points. In economics, it is ocen used
to assess the fluctua?on and spread of certain economic factors (prices, ROI, growth rates, etc.). High variance
will indicate that the data is spread out from the average (mean), which may indicate higher risk or uncertainty.
Conversely, a lower variance will indicate a more stable and predictable economic outcome.
Analysis of the data indicates that GMG had a substan?ally larger variance of 49.35 compared to AORD at 8.55
for the first period and an increasingly larger variance at 129.64 compared to 26.42 for the second period. This
would indicate to poten?al investors that GMG would be a higher risk investment but would poten?ally earn
higher returns.
CORRELATION:
Correla?on refers to the degree in which economic variables move in rela?on to each other and assesses the
strength and direc?on of the rela?onship between them.
When analysing the data, it indicates a rela?vely weak posi?ve correla?on for the first period at 0.33, and a
much stronger correla?on at 0.84 for the second period. Both periods indicate a posi?ve correla?on, which
would mean an increase for both should one variable increase, however period one shows a much weaker
rela?onship in comparison to period two.
PART D)
Es?mated beta for Period 1:
𝛽! =
𝜌!" 𝑥𝜎!
𝜎"
𝛽! =
0.337𝑥7.025
2.924
𝛽! = ~0.810
Es?mated beta for period 2:
𝛽! =
𝜌!" 𝑥𝜎!
𝜎"
𝛽! =
0.843𝑥11.386
5.140
𝛽! = ~1.868
PART E)
The beta value is a measure that quan1fies the vola1lity of an en1ty in rela1on to the overall market. This
value has been calculated for both period 1 (March 2020 – August 2021) and for period 2 (October 2021 –
February 2023). Period 1 indicated a beta of 0.810. This suggests that GMG is rela1vely less risky
compared to the market average, indica1ng roughly a 0.8% increase should the overall market increase by
1%. Investors might see this a safer investment should the market crash but would yield smaller returns
should the market increase.
In period 2, the beta increased to 1.869. a beta higher than one would indicate to poten1al investors that
GMG is higher risk than the overall market and would incur poten1ally larger fluctua1on should the
market value change. A higher risk however would al yield greater losses should the market crash.
Investors looking for a higher risk investment, and willing to accept the increased vola1lity may consider
GMG to be an ideal investment.
PART F)
Goodman Group (GMG) is a well-established Australian real estate company that specialises in the ownership,
development, and management of industrial and logis?cs proper?es. The company is known for its extensive
poreolio of warehouses, distribu?on centres, and business parks globally.
A few key characteris?cs of GMG include:
Global presence:
Goodman has a significant global footprint, with opera?ons across the Asia-Pacific, the Americas, Europe and
the United Kingdom, making them a key player in the interna?onal real estate game.
LogisBcal Focus:
The company primarily focuses on logis?cs and e-commerce-related proper?es, capitalising on the growing
demand for modern warehousing and distribu?on facili?es.
Sustainability:
GMG is commiWed to sustainability and environmentally responsible development. They normally incorporate
energy-efficient technology and environmentally friendly prac?ces in their establishments.
Performance:
GMG has a track record of strong financial performance and steady growth, which has made it an aWrac?ve
investment choice for many shareholders.
ReputaBon:
The company is well-regarded for their exper?se in management, logis?cal real estate innova?on, and
customer-centric approach, making them a preferred partner for businesses seeking modern logis?cs solu?ons.
GMG has a market cap of $44.04 billion, a current share price of AUD$23.19, and had a 2022EOFY revenue of
$1.40 billion, and increase from the previous years’ revenue of $1.39 billion.
PART G)
The change in a company's beta value over ?me can be influenced by several factors, including changes in the
company's opera?ons, market condi?ons, and investor percep?on.
The company may have undergone changes in its business opera?ons during this period. For instance, it could
have expanded its poreolio, entered new markets, or shiced its focus within the industrial and logis?cs real
estate sector. These changes can affect how the company's returns correlate with market movements, which in
turn would influence the beta of an en?ty. The period from April 2020 to August 2021 was clouded by
economic recovery from the ini?al COVID-19 pandemic, and the market may have perceived GMG as having
rela?vely lower risk during this phase. However, between October 2021 and February 2023, market condi?ons
evolved; with changes in interest rates, economic growth expecta?ons, or sector-specific trends affec?ng beta.
The beta may also have been affected by investor percep?on. Percep?on of GMG’s risk poreolio, and their
ability to generate growth and profit may have had an impact on their beta. An increase in the acquisi?on of
proper?es in the second period may have also contributed to the increase in beta. Acquisi?on of areas within
Sydney’s CBD and closely surrounding suburbs may have aWracted poten?al investors through a drama?c
increase in their poreolio.