Correlation Between Continental and Greenlane Holdings

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

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

Diversification Opportunities for Continental and Greenlane Holdings

0.65

Correlation Coefficient

Continental  Greenlane Holdings

Poor diversification

The 3 months correlation between Continental and Greenlane is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Caleres and Greenlane Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Greenlane Holdings and Continental 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 Caleres are associated (or correlated) with Greenlane Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Greenlane Holdings has no effect on the direction of Continental i.e., Continental and Greenlane Holdings go up and down completely randomly.

Pair Corralation between Continental and Greenlane Holdings

Considering the 90-day investment horizon Continental is expected to generate 2.48 times less return on investment than Greenlane Holdings. But when comparing it to its historical volatility, Caleres is 6.36 times less risky than Greenlane Holdings. It trades about 0.02 of its potential returns per unit of risk. Greenlane Holdings is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  3,300  in Greenlane Holdings on September 21, 2024 and sell it today you would lose (3,158) from holding Greenlane Holdings or give up 95.7% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.8%
Values	Daily Returns

Caleres  vs.  Greenlane Holdings

Continental

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Caleres has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Greenlane Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Greenlane Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's essential indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Continental and Greenlane Holdings

The main advantage of trading using opposite Continental and Greenlane Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Continental position performs unexpectedly, Greenlane Holdings 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 Greenlane Holdings will offset losses from the drop in Greenlane Holdings' long position.

The idea behind Caleres and Greenlane 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.