Correlation Between Growlife and American Green
Can any of the company-specific risk be diversified away by investing in both Growlife and American Green 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 Growlife and American Green into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Growlife and American Green, you can compare the effects of market volatilities on Growlife and American Green 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 Growlife with a short position of American Green. Check out your portfolio center. Please also check ongoing floating volatility patterns of Growlife and American Green.
Diversification Opportunities for Growlife and American Green
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Growlife and American is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Growlife and American Green in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Green and Growlife 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 Growlife are associated (or correlated) with American Green. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Green has no effect on the direction of Growlife i.e., Growlife and American Green go up and down completely randomly.
Pair Corralation between Growlife and American Green
Given the investment horizon of 90 days Growlife is expected to under-perform the American Green. But the pink sheet apears to be less risky and, when comparing its historical volatility, Growlife is 1.26 times less risky than American Green. The pink sheet trades about -0.21 of its potential returns per unit of risk. The American Green is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 0.04 in American Green on August 30, 2024 and sell it today you would earn a total of 0.01 from holding American Green or generate 25.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Growlife vs. American Green
Performance |
| Timeline |
| Growlife |
| American Green |
Growlife and American Green Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Growlife and American Green
The main advantage of trading using opposite Growlife and American Green positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Growlife position performs unexpectedly, American Green 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 American Green will offset losses from the drop in American Green's long position.| Growlife vs. Greengro Tech | Growlife vs. Hemp Inc | Growlife vs. Medical Marijuana I | Growlife vs. American Green |
| American Green vs. Greengro Tech | American Green vs. Growlife | American Green vs. Hemp Inc | American Green vs. Easton Pharmaceutica |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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