Correlation Between Rocky Mountain and American Green
Can any of the company-specific risk be diversified away by investing in both Rocky Mountain 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 Rocky Mountain and American Green into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rocky Mountain High and American Green, you can compare the effects of market volatilities on Rocky Mountain 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 Rocky Mountain with a short position of American Green. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rocky Mountain and American Green.
Diversification Opportunities for Rocky Mountain and American Green
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Rocky and American is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Rocky Mountain High and American Green in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Green and Rocky Mountain 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 Rocky Mountain High 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 Rocky Mountain i.e., Rocky Mountain and American Green go up and down completely randomly.
Pair Corralation between Rocky Mountain and American Green
Given the investment horizon of 90 days Rocky Mountain High is expected to generate 1.77 times more return on investment than American Green. However, Rocky Mountain is 1.77 times more volatile than American Green. It trades about 0.08 of its potential returns per unit of risk. American Green is currently generating about 0.13 per unit of risk. If you would invest 0.80 in Rocky Mountain High on August 28, 2024 and sell it today you would lose (0.20) from holding Rocky Mountain High or give up 25.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Rocky Mountain High vs. American Green
Performance |
| Timeline |
| Rocky Mountain High |
| American Green |
Rocky Mountain and American Green Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rocky Mountain and American Green
The main advantage of trading using opposite Rocky Mountain and American Green positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rocky Mountain 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.| Rocky Mountain vs. DNA Brands | Rocky Mountain vs. Fbec Worldwide | Rocky Mountain vs. Greene Concepts | Rocky Mountain vs. Keurig Dr Pepper |
| 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
Other Complementary Tools
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency |