Correlation Between Green Thumb and GrowGeneration Corp
Can any of the company-specific risk be diversified away by investing in both Green Thumb and GrowGeneration Corp 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 GrowGeneration Corp 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 GrowGeneration Corp, you can compare the effects of market volatilities on Green Thumb and GrowGeneration Corp 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 GrowGeneration Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Green Thumb and GrowGeneration Corp.
Diversification Opportunities for Green Thumb and GrowGeneration Corp
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Green and GrowGeneration is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Green Thumb Industries and GrowGeneration Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GrowGeneration Corp 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 GrowGeneration Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GrowGeneration Corp has no effect on the direction of Green Thumb i.e., Green Thumb and GrowGeneration Corp go up and down completely randomly.
Pair Corralation between Green Thumb and GrowGeneration Corp
Assuming the 90 days horizon Green Thumb is expected to generate 4.4 times less return on investment than GrowGeneration Corp. In addition to that, Green Thumb is 1.19 times more volatile than GrowGeneration Corp. It trades about 0.0 of its total potential returns per unit of risk. GrowGeneration Corp is currently generating about 0.02 per unit of volatility. If you would invest 193.00 in GrowGeneration Corp on September 3, 2024 and sell it today you would earn a total of 1.00 from holding GrowGeneration Corp or generate 0.52% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Green Thumb Industries vs. GrowGeneration Corp
Performance |
Timeline |
Green Thumb Industries |
GrowGeneration Corp |
Green Thumb and GrowGeneration Corp Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Green Thumb and GrowGeneration Corp
The main advantage of trading using opposite Green Thumb and GrowGeneration Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Green Thumb position performs unexpectedly, GrowGeneration Corp 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 GrowGeneration Corp will offset losses from the drop in GrowGeneration Corp's long position.Green Thumb vs. Curaleaf Holdings | Green Thumb vs. Trulieve Cannabis Corp | Green Thumb vs. Cresco Labs | Green Thumb vs. GrowGeneration Corp |
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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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