Correlation Between Church Crawford and Green Leaf

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

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

Diversification Opportunities for Church Crawford and Green Leaf

-0.03

Correlation Coefficient

Church Crawford  Green Leaf

Good diversification

The 3 months correlation between Church and Green is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Church Crawford and Green Leaf Innovations in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Green Leaf Innovations and Church Crawford 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 Church Crawford are associated (or correlated) with Green Leaf. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Green Leaf Innovations has no effect on the direction of Church Crawford i.e., Church Crawford and Green Leaf go up and down completely randomly.

Pair Corralation between Church Crawford and Green Leaf

Given the investment horizon of 90 days Church Crawford is expected to generate 4.79 times less return on investment than Green Leaf. But when comparing it to its historical volatility, Church Crawford is 2.1 times less risky than Green Leaf. It trades about 0.07 of its potential returns per unit of risk. Green Leaf Innovations is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  0.01  in Green Leaf Innovations on September 12, 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 Against
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Church Crawford  vs.  Green Leaf Innovations

Church Crawford

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Church Crawford are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Church Crawford reported solid returns over the last few months and may actually be approaching a breakup point.

Green Leaf Innovations

Risk-Adjusted Performance

12 of 100

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.

Pair Trading with Church Crawford and Green Leaf

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

The idea behind Church Crawford and Green Leaf Innovations 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.

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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.