Correlation Between Green Thumb and Amazonas Florestal

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

By analyzing existing cross correlation between Green Thumb Industries and Amazonas Florestal, you can compare the effects of market volatilities on Green Thumb and Amazonas Florestal 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 Thumb with a short position of Amazonas Florestal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Green Thumb and Amazonas Florestal.

Diversification Opportunities for Green Thumb and Amazonas Florestal

0.24

Correlation Coefficient

Green Thumb  Amazonas Florestal

Modest diversification

The 3 months correlation between Green and Amazonas is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Green Thumb Industries and Amazonas Florestal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amazonas Florestal and Green Thumb 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 Thumb Industries are associated (or correlated) with Amazonas Florestal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amazonas Florestal has no effect on the direction of Green Thumb i.e., Green Thumb and Amazonas Florestal go up and down completely randomly.

Pair Corralation between Green Thumb and Amazonas Florestal

Assuming the 90 days horizon Green Thumb is expected to generate 241.31 times less return on investment than Amazonas Florestal. But when comparing it to its historical volatility, Green Thumb Industries is 34.48 times less risky than Amazonas Florestal. It trades about 0.02 of its potential returns per unit of risk. Amazonas Florestal is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  0.01  in Amazonas Florestal on October 22, 2024 and sell it today you would earn a total of  0.00  from holding Amazonas Florestal or generate 0.0% return on investment over 90 days.

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

Green Thumb Industries  vs.  Amazonas Florestal

Green Thumb Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Green Thumb Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's forward indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Amazonas Florestal

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Amazonas Florestal are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite quite weak technical and fundamental indicators, Amazonas Florestal disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Green Thumb and Amazonas Florestal

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

The idea behind Green Thumb Industries and Amazonas Florestal 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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .