Correlation Between Graco and Greenland Acquisition

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

By analyzing existing cross correlation between Graco Inc and Greenland Acquisition Corp, you can compare the effects of market volatilities on Graco and Greenland Acquisition 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 Graco with a short position of Greenland Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Graco and Greenland Acquisition.

Diversification Opportunities for Graco and Greenland Acquisition

0.08

Correlation Coefficient

Graco  Greenland Acquisition

Significant diversification

The 3 months correlation between Graco and Greenland is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Graco Inc and Greenland Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Greenland Acquisition and Graco 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 Graco Inc are associated (or correlated) with Greenland Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Greenland Acquisition has no effect on the direction of Graco i.e., Graco and Greenland Acquisition go up and down completely randomly.

Pair Corralation between Graco and Greenland Acquisition

Considering the 90-day investment horizon Graco is expected to generate 48.27 times less return on investment than Greenland Acquisition. But when comparing it to its historical volatility, Graco Inc is 8.74 times less risky than Greenland Acquisition. It trades about 0.0 of its potential returns per unit of risk. Greenland Acquisition Corp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  193.00  in Greenland Acquisition Corp on December 29, 2024 and sell it today you would lose (20.00) from holding Greenland Acquisition Corp or give up 10.36% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Graco Inc  vs.  Greenland Acquisition Corp

Graco Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Graco Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Graco is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Greenland Acquisition

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Greenland Acquisition Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal technical and fundamental indicators, Greenland Acquisition exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Graco and Greenland Acquisition

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

The idea behind Graco Inc and Greenland Acquisition Corp 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.