Correlation Between Green Globe and 22nd Century

Can any of the company-specific risk be diversified away by investing in both Green Globe and 22nd Century 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 Green Globe and 22nd Century into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Green Globe International and 22nd Century Group, you can compare the effects of market volatilities on Green Globe and 22nd Century 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 Green Globe with a short position of 22nd Century. Check out your portfolio center. Please also check ongoing floating volatility patterns of Green Globe and 22nd Century.

Diversification Opportunities for Green Globe and 22nd Century

0.77

Correlation Coefficient

Green Globe  22nd Century

Poor diversification

The 3 months correlation between Green and 22nd is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Green Globe International and 22nd Century Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 22nd Century Group and Green Globe 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 Green Globe International are associated (or correlated) with 22nd Century. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 22nd Century Group has no effect on the direction of Green Globe i.e., Green Globe and 22nd Century go up and down completely randomly.

Pair Corralation between Green Globe and 22nd Century

Given the investment horizon of 90 days Green Globe International is expected to generate 4.19 times more return on investment than 22nd Century. However, Green Globe is 4.19 times more volatile than 22nd Century Group. It trades about 0.17 of its potential returns per unit of risk. 22nd Century Group is currently generating about -0.11 per unit of risk. If you would invest  0.03  in Green Globe International on December 27, 2024 and sell it today you would lose (0.01) from holding Green Globe International or give up 33.33% of portfolio value over 90 days.

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

Green Globe International  vs.  22nd Century Group

Green Globe International

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Green Globe International are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite fairly conflicting forward indicators, Green Globe demonstrated solid returns over the last few months and may actually be approaching a breakup point.

22nd Century Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days 22nd Century Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's forward 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.

Pair Trading with Green Globe and 22nd Century

The main advantage of trading using opposite Green Globe and 22nd Century positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Green Globe position performs unexpectedly, 22nd Century 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 22nd Century will offset losses from the drop in 22nd Century's long position.

The idea behind Green Globe International and 22nd Century Group 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.