Correlation Between American Green and Growlife
Can any of the company-specific risk be diversified away by investing in both American Green and Growlife 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 American Green and Growlife into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Green and Growlife, you can compare the effects of market volatilities on American Green and Growlife 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 American Green with a short position of Growlife. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Green and Growlife.
Diversification Opportunities for American Green and Growlife
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between American and Growlife is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding American Green and Growlife in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Growlife and American Green 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 American Green are associated (or correlated) with Growlife. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Growlife has no effect on the direction of American Green i.e., American Green and Growlife go up and down completely randomly.
Pair Corralation between American Green and Growlife
Given the investment horizon of 90 days American Green is expected to generate 9.7 times less return on investment than Growlife. But when comparing it to its historical volatility, American Green is 6.69 times less risky than Growlife. It trades about 0.11 of its potential returns per unit of risk. Growlife is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 0.08 in Growlife on September 1, 2024 and sell it today you would lose (0.07) from holding Growlife or give up 87.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Green vs. Growlife
Performance |
| Timeline |
| American Green |
| Growlife |
American Green and Growlife Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Green and Growlife
The main advantage of trading using opposite American Green and Growlife positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Green position performs unexpectedly, Growlife 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 Growlife will offset losses from the drop in Growlife's long position.| American Green vs. Greengro Tech | American Green vs. Growlife | American Green vs. Hemp Inc | American Green vs. Easton Pharmaceutica |
| Growlife vs. Greengro Tech | Growlife vs. Hemp Inc | Growlife vs. Medical Marijuana I | Growlife vs. American Green |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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