Correlation Between Central Garden and Thorne HealthTech

Can any of the company-specific risk be diversified away by investing in both Central Garden and Thorne HealthTech 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 Central Garden and Thorne HealthTech into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Central Garden Pet and Thorne HealthTech, you can compare the effects of market volatilities on Central Garden and Thorne HealthTech 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 Central Garden with a short position of Thorne HealthTech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Central Garden and Thorne HealthTech.

Diversification Opportunities for Central Garden and Thorne HealthTech

0.57

Correlation Coefficient

Central Garden  Thorne HealthTech

Very weak diversification

The 3 months correlation between Central and Thorne is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Central Garden Pet and Thorne HealthTech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thorne HealthTech and Central Garden 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 Central Garden Pet are associated (or correlated) with Thorne HealthTech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thorne HealthTech has no effect on the direction of Central Garden i.e., Central Garden and Thorne HealthTech go up and down completely randomly.

Pair Corralation between Central Garden and Thorne HealthTech

If you would invest  3,773  in Central Garden Pet on September 22, 2024 and sell it today you would earn a total of  231.00  from holding Central Garden Pet or generate 6.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	1.56%
Values	Daily Returns

Central Garden Pet  vs.  Thorne HealthTech

Central Garden Pet

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Central Garden Pet are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Central Garden may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Thorne HealthTech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Thorne HealthTech has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Thorne HealthTech is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Central Garden and Thorne HealthTech

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

The idea behind Central Garden Pet and Thorne HealthTech 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.