Correlation Between GreenPower and Greenlane Renewables

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Can any of the company-specific risk be diversified away by investing in both GreenPower and Greenlane Renewables 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 GreenPower and Greenlane Renewables into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GreenPower Motor and Greenlane Renewables, you can compare the effects of market volatilities on GreenPower and Greenlane Renewables 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 GreenPower with a short position of Greenlane Renewables. Check out your portfolio center. Please also check ongoing floating volatility patterns of GreenPower and Greenlane Renewables.

Diversification Opportunities for GreenPower and Greenlane Renewables

-0.57
  Correlation Coefficient

Excellent diversification

The 3 months correlation between GreenPower and Greenlane is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding GreenPower Motor and Greenlane Renewables in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Greenlane Renewables and GreenPower 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 GreenPower Motor are associated (or correlated) with Greenlane Renewables. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Greenlane Renewables has no effect on the direction of GreenPower i.e., GreenPower and Greenlane Renewables go up and down completely randomly.

Pair Corralation between GreenPower and Greenlane Renewables

Assuming the 90 days horizon GreenPower Motor is expected to under-perform the Greenlane Renewables. But the stock apears to be less risky and, when comparing its historical volatility, GreenPower Motor is 1.27 times less risky than Greenlane Renewables. The stock trades about -0.03 of its potential returns per unit of risk. The Greenlane Renewables is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  7.00  in Greenlane Renewables on September 11, 2024 and sell it today you would earn a total of  3.00  from holding Greenlane Renewables or generate 42.86% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

GreenPower Motor  vs.  Greenlane Renewables

 Performance 
       Timeline  
GreenPower Motor 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days GreenPower Motor has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.
Greenlane Renewables 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Greenlane Renewables are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Greenlane Renewables displayed solid returns over the last few months and may actually be approaching a breakup point.

GreenPower and Greenlane Renewables Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with GreenPower and Greenlane Renewables

The main advantage of trading using opposite GreenPower and Greenlane Renewables positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GreenPower position performs unexpectedly, Greenlane Renewables 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 Renewables will offset losses from the drop in Greenlane Renewables' long position.
The idea behind GreenPower Motor and Greenlane Renewables 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.

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