Correlation Between Central Garden and Grand Havana
Can any of the company-specific risk be diversified away by investing in both Central Garden and Grand Havana 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 Central Garden and Grand Havana into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Central Garden Pet and Grand Havana, you can compare the effects of market volatilities on Central Garden and Grand Havana 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 Central Garden with a short position of Grand Havana. Check out your portfolio center. Please also check ongoing floating volatility patterns of Central Garden and Grand Havana.
Diversification Opportunities for Central Garden and Grand Havana
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Central and Grand is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Central Garden Pet and Grand Havana in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grand Havana and Central Garden 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 Central Garden Pet are associated (or correlated) with Grand Havana. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grand Havana has no effect on the direction of Central Garden i.e., Central Garden and Grand Havana go up and down completely randomly.
Pair Corralation between Central Garden and Grand Havana
Assuming the 90 days horizon Central Garden Pet is expected to under-perform the Grand Havana. But the stock apears to be less risky and, when comparing its historical volatility, Central Garden Pet is 4.91 times less risky than Grand Havana. The stock trades about -0.11 of its potential returns per unit of risk. The Grand Havana is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 0.07 in Grand Havana on November 3, 2024 and sell it today you would lose (0.01) from holding Grand Havana or give up 14.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Central Garden Pet vs. Grand Havana
Performance |
| Timeline |
| Central Garden Pet |
| Grand Havana |
Central Garden and Grand Havana Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Central Garden and Grand Havana
The main advantage of trading using opposite Central Garden and Grand Havana positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Central Garden position performs unexpectedly, Grand Havana 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 Grand Havana will offset losses from the drop in Grand Havana's long position.| Central Garden vs. Seneca Foods Corp | Central Garden vs. Natures Sunshine Products | Central Garden vs. J J Snack | Central Garden vs. Central Garden Pet |
| Grand Havana vs. Right On Brands | Grand Havana vs. BioAdaptives | Grand Havana vs. Yuenglings Ice Cream | Grand Havana vs. Bit Origin |
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 CEOs Directory module to screen CEOs from public companies around the world.
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