Correlation Between Edible Garden and Global Clean

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Can any of the company-specific risk be diversified away by investing in both Edible Garden and Global Clean 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 Edible Garden and Global Clean into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Edible Garden AG and Global Clean Energy, you can compare the effects of market volatilities on Edible Garden and Global Clean 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 Edible Garden with a short position of Global Clean. Check out your portfolio center. Please also check ongoing floating volatility patterns of Edible Garden and Global Clean.

Diversification Opportunities for Edible Garden and Global Clean

0.71
  Correlation Coefficient

Poor diversification

The 3 months correlation between Edible and Global is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Edible Garden AG and Global Clean Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Clean Energy and Edible 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 Edible Garden AG are associated (or correlated) with Global Clean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Clean Energy has no effect on the direction of Edible Garden i.e., Edible Garden and Global Clean go up and down completely randomly.

Pair Corralation between Edible Garden and Global Clean

Assuming the 90 days horizon Edible Garden AG is expected to generate 3.56 times more return on investment than Global Clean. However, Edible Garden is 3.56 times more volatile than Global Clean Energy. It trades about 0.14 of its potential returns per unit of risk. Global Clean Energy is currently generating about -0.21 per unit of risk. If you would invest  3.15  in Edible Garden AG on November 6, 2024 and sell it today you would earn a total of  0.55  from holding Edible Garden AG or generate 17.46% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy95.0%
ValuesDaily Returns

Edible Garden AG  vs.  Global Clean Energy

 Performance 
       Timeline  
Edible Garden AG 

Risk-Adjusted Performance

13 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Edible Garden AG are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting essential indicators, Edible Garden showed solid returns over the last few months and may actually be approaching a breakup point.
Global Clean Energy 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Global Clean Energy are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly conflicting technical and fundamental indicators, Global Clean demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Edible Garden and Global Clean Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Edible Garden and Global Clean

The main advantage of trading using opposite Edible Garden and Global Clean positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Edible Garden position performs unexpectedly, Global Clean 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 Global Clean will offset losses from the drop in Global Clean's long position.
The idea behind Edible Garden AG and Global Clean Energy 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.
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.

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