Correlation Between Green Leaf and All American

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

By analyzing existing cross correlation between Green Leaf Innovations and All American Gld, you can compare the effects of market volatilities on Green Leaf and All American 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 Leaf with a short position of All American. Check out your portfolio center. Please also check ongoing floating volatility patterns of Green Leaf and All American.

Diversification Opportunities for Green Leaf and All American

0.41

Correlation Coefficient

Green Leaf  All American

Very weak diversification

The 3 months correlation between Green and All is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Green Leaf Innovations and All American Gld in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on All American Gld and Green Leaf 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 Leaf Innovations are associated (or correlated) with All American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of All American Gld has no effect on the direction of Green Leaf i.e., Green Leaf and All American go up and down completely randomly.

Pair Corralation between Green Leaf and All American

Given the investment horizon of 90 days Green Leaf Innovations is expected to generate 12.86 times more return on investment than All American. However, Green Leaf is 12.86 times more volatile than All American Gld. It trades about 0.15 of its potential returns per unit of risk. All American Gld is currently generating about -0.01 per unit of risk. If you would invest  0.01  in Green Leaf Innovations on December 27, 2024 and sell it today you would earn a total of  0.00  from holding Green Leaf Innovations or generate 0.0% return on investment over 90 days.

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

Green Leaf Innovations  vs.  All American Gld

Green Leaf Innovations

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Green Leaf Innovations are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal essential indicators, Green Leaf reported solid returns over the last few months and may actually be approaching a breakup point.

All American Gld

Risk-Adjusted Performance

Weak

Over the last 90 days All American Gld has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, All American is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Green Leaf and All American

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

The idea behind Green Leaf Innovations and All American Gld 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.