Correlation Between Greenlite Ventures and All American

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

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

Diversification Opportunities for Greenlite Ventures and All American

0.23

Correlation Coefficient

Greenlite Ventures  All American

Modest diversification

The 3 months correlation between Greenlite and All is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Greenlite Ventures 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 Greenlite Ventures 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 Greenlite Ventures 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 Greenlite Ventures i.e., Greenlite Ventures and All American go up and down completely randomly.

Pair Corralation between Greenlite Ventures and All American

Given the investment horizon of 90 days Greenlite Ventures is expected to under-perform the All American. In addition to that, Greenlite Ventures is 1.15 times more volatile than All American Gld. It trades about -0.19 of its total potential returns per unit of risk. All American Gld is currently generating about 0.01 per unit of volatility. If you would invest  0.12  in All American Gld on December 20, 2024 and sell it today you would lose (0.03) from holding All American Gld or give up 25.0% of portfolio value over 90 days.

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

Greenlite Ventures  vs.  All American Gld

Greenlite Ventures

Risk-Adjusted Performance

Very Weak

Over the last 90 days Greenlite Ventures has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators 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.

All American Gld

Risk-Adjusted Performance

Very 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 conflicting technical and fundamental indicators, All American may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Greenlite Ventures and All American

The main advantage of trading using opposite Greenlite Ventures and All American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Greenlite Ventures 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 Greenlite Ventures 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.