Correlation Between Greenrose Acquisition and NewHold Investment

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Can any of the company-specific risk be diversified away by investing in both Greenrose Acquisition and NewHold Investment 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 Greenrose Acquisition and NewHold Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Greenrose Acquisition Corp and NewHold Investment Corp, you can compare the effects of market volatilities on Greenrose Acquisition and NewHold Investment 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 Greenrose Acquisition with a short position of NewHold Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Greenrose Acquisition and NewHold Investment.

Diversification Opportunities for Greenrose Acquisition and NewHold Investment

-0.62
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Greenrose and NewHold is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Greenrose Acquisition Corp and NewHold Investment Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NewHold Investment Corp and Greenrose Acquisition 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 Greenrose Acquisition Corp are associated (or correlated) with NewHold Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NewHold Investment Corp has no effect on the direction of Greenrose Acquisition i.e., Greenrose Acquisition and NewHold Investment go up and down completely randomly.

Pair Corralation between Greenrose Acquisition and NewHold Investment

Assuming the 90 days horizon Greenrose Acquisition is expected to generate 4.35 times less return on investment than NewHold Investment. But when comparing it to its historical volatility, Greenrose Acquisition Corp is 4.1 times less risky than NewHold Investment. It trades about 0.13 of its potential returns per unit of risk. NewHold Investment Corp is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  15.00  in NewHold Investment Corp on September 6, 2024 and sell it today you would lose (13.70) from holding NewHold Investment Corp or give up 91.33% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy31.58%
ValuesDaily Returns

Greenrose Acquisition Corp  vs.  NewHold Investment Corp

 Performance 
       Timeline  
Greenrose Acquisition 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Greenrose Acquisition Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Greenrose Acquisition is not utilizing all of its potentials. The newest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.
NewHold Investment Corp 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days NewHold Investment Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable fundamental indicators, NewHold Investment is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Greenrose Acquisition and NewHold Investment Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Greenrose Acquisition and NewHold Investment

The main advantage of trading using opposite Greenrose Acquisition and NewHold Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Greenrose Acquisition position performs unexpectedly, NewHold Investment 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 NewHold Investment will offset losses from the drop in NewHold Investment's long position.
The idea behind Greenrose Acquisition Corp and NewHold Investment Corp 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 Global Correlations module to find global opportunities by holding instruments from different markets.

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