Correlation Between Global Clean and Edible Garden

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

By analyzing existing cross correlation between Global Clean Energy and Edible Garden AG, you can compare the effects of market volatilities on Global Clean and Edible Garden 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 Global Clean with a short position of Edible Garden. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Clean and Edible Garden.

Diversification Opportunities for Global Clean and Edible Garden

0.71

Correlation Coefficient

Global Clean  Edible Garden

Poor diversification

The 3 months correlation between Global and Edible is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Global Clean Energy and Edible Garden AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Edible Garden AG and Global Clean 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 Global Clean Energy are associated (or correlated) with Edible Garden. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Edible Garden AG has no effect on the direction of Global Clean i.e., Global Clean and Edible Garden go up and down completely randomly.

Pair Corralation between Global Clean and Edible Garden

Given the investment horizon of 90 days Global Clean Energy is expected to under-perform the Edible Garden. But the otc stock apears to be less risky and, when comparing its historical volatility, Global Clean Energy is 1.09 times less risky than Edible Garden. The otc stock trades about -0.16 of its potential returns per unit of risk. The Edible Garden AG is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest  818.00  in Edible Garden AG on December 28, 2024 and sell it today you would lose (456.00) from holding Edible Garden AG or give up 55.75% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.36%
Values	Daily Returns

Global Clean Energy  vs.  Edible Garden AG

Global Clean Energy

Risk-Adjusted Performance

Very Weak

Over the last 90 days Global Clean Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Edible Garden AG

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Global Clean and Edible Garden

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

The idea behind Global Clean Energy and Edible Garden AG 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.

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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.