Correlation Between Nextleaf Solutions and Green Cures

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

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

Diversification Opportunities for Nextleaf Solutions and Green Cures

0.16

Correlation Coefficient

Nextleaf Solutions  Green Cures

Average diversification

The 3 months correlation between Nextleaf and Green is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Nextleaf Solutions and Green Cures Botanical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Green Cures Botanical and Nextleaf Solutions 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 Nextleaf Solutions are associated (or correlated) with Green Cures. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Green Cures Botanical has no effect on the direction of Nextleaf Solutions i.e., Nextleaf Solutions and Green Cures go up and down completely randomly.

Pair Corralation between Nextleaf Solutions and Green Cures

Assuming the 90 days horizon Nextleaf Solutions is expected to generate 110.2 times less return on investment than Green Cures. But when comparing it to its historical volatility, Nextleaf Solutions is 5.61 times less risky than Green Cures. It trades about 0.01 of its potential returns per unit of risk. Green Cures Botanical is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  0.02  in Green Cures Botanical on December 22, 2024 and sell it today you would earn a total of  0.00  from holding Green Cures Botanical or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Nextleaf Solutions  vs.  Green Cures Botanical

Nextleaf Solutions

Risk-Adjusted Performance

Weak

Over the last 90 days Nextleaf Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Nextleaf Solutions is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Green Cures Botanical

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Green Cures Botanical are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak fundamental indicators, Green Cures unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nextleaf Solutions and Green Cures

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

The idea behind Nextleaf Solutions and Green Cures Botanical 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.