Correlation Between Bright Green and Goodness Growth

Can any of the company-specific risk be diversified away by investing in both Bright Green 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 Bright Green and Goodness Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bright Green Corp and Goodness Growth Holdings, you can compare the effects of market volatilities on Bright Green 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 Bright Green with a short position of Goodness Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bright Green and Goodness Growth.

Diversification Opportunities for Bright Green and Goodness Growth

-0.39

Correlation Coefficient

Bright Green  Goodness Growth

Very good diversification

The 3 months correlation between Bright and Goodness is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Bright Green Corp 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 Bright 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 Bright Green Corp 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 Bright Green i.e., Bright Green and Goodness Growth go up and down completely randomly.

Pair Corralation between Bright Green and Goodness Growth

Given the investment horizon of 90 days Bright Green Corp is expected to under-perform the Goodness Growth. In addition to that, Bright Green is 2.39 times more volatile than Goodness Growth Holdings. It trades about -0.23 of its total potential returns per unit of risk. Goodness Growth Holdings is currently generating about 0.05 per unit of volatility. If you would invest  49.00  in Goodness Growth Holdings on October 18, 2024 and sell it today you would earn a total of  4.00  from holding Goodness Growth Holdings or generate 8.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	9.76%
Values	Daily Returns

Bright Green Corp  vs.  Goodness Growth Holdings

Bright Green Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bright Green Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Bright Green is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Goodness Growth Holdings

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Goodness Growth Holdings are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Goodness Growth reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bright Green and Goodness Growth

The main advantage of trading using opposite Bright Green and Goodness Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bright Green 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 Bright Green Corp 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.

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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.