Correlation Between Green Cures and Goodness Growth
Can any of the company-specific risk be diversified away by investing in both Green Cures and Goodness Growth 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 Green Cures and Goodness Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Green Cures Botanical and Goodness Growth Holdings, you can compare the effects of market volatilities on Green Cures and Goodness Growth 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 Green Cures with a short position of Goodness Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Green Cures and Goodness Growth.
Diversification Opportunities for Green Cures and Goodness Growth
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Green and Goodness is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Green Cures Botanical and Goodness Growth Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goodness Growth Holdings and Green Cures 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 Green Cures Botanical are associated (or correlated) with Goodness Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goodness Growth Holdings has no effect on the direction of Green Cures i.e., Green Cures and Goodness Growth go up and down completely randomly.
Pair Corralation between Green Cures and Goodness Growth
Given the investment horizon of 90 days Green Cures Botanical is expected to generate 8.14 times more return on investment than Goodness Growth. However, Green Cures is 8.14 times more volatile than Goodness Growth Holdings. It trades about 0.17 of its potential returns per unit of risk. Goodness Growth Holdings is currently generating about -0.13 per unit of risk. If you would invest 0.02 in Green Cures Botanical on August 28, 2024 and sell it today you would lose (0.01) from holding Green Cures Botanical or give up 50.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Green Cures Botanical vs. Goodness Growth Holdings
Performance |
| Timeline |
| Green Cures Botanical |
| Goodness Growth Holdings |
Green Cures and Goodness Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Green Cures and Goodness Growth
The main advantage of trading using opposite Green Cures and Goodness Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Green Cures position performs unexpectedly, Goodness Growth 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 Goodness Growth will offset losses from the drop in Goodness Growth's long position.The idea behind Green Cures Botanical and Goodness Growth Holdings 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.| Goodness Growth vs. Verano Holdings Corp | Goodness Growth vs. Lowell Farms | Goodness Growth vs. Ascend Wellness Holdings | Goodness Growth vs. 4Front Ventures Corp |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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