Correlation Between GrowGeneration Corp and Pacific Biosciences

Can any of the company-specific risk be diversified away by investing in both GrowGeneration Corp and Pacific Biosciences 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 GrowGeneration Corp and Pacific Biosciences into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between GrowGeneration Corp and Pacific Biosciences of, you can compare the effects of market volatilities on GrowGeneration Corp and Pacific Biosciences 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 GrowGeneration Corp with a short position of Pacific Biosciences. Check out your portfolio center. Please also check ongoing floating volatility patterns of GrowGeneration Corp and Pacific Biosciences.

Diversification Opportunities for GrowGeneration Corp and Pacific Biosciences

-0.15

Correlation Coefficient

GrowGeneration Corp  Pacific Biosciences

Good diversification

The 3 months correlation between GrowGeneration and Pacific is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding GrowGeneration Corp and Pacific Biosciences of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacific Biosciences and GrowGeneration Corp 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 GrowGeneration Corp are associated (or correlated) with Pacific Biosciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacific Biosciences has no effect on the direction of GrowGeneration Corp i.e., GrowGeneration Corp and Pacific Biosciences go up and down completely randomly.

Pair Corralation between GrowGeneration Corp and Pacific Biosciences

Given the investment horizon of 90 days GrowGeneration Corp is expected to under-perform the Pacific Biosciences. But the stock apears to be less risky and, when comparing its historical volatility, GrowGeneration Corp is 1.79 times less risky than Pacific Biosciences. The stock trades about -0.04 of its potential returns per unit of risk. The Pacific Biosciences of is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  185.00  in Pacific Biosciences of on September 15, 2024 and sell it today you would earn a total of  20.00  from holding Pacific Biosciences of or generate 10.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

GrowGeneration Corp  vs.  Pacific Biosciences of

GrowGeneration Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GrowGeneration Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pacific Biosciences

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Pacific Biosciences of are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental indicators, Pacific Biosciences sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GrowGeneration Corp and Pacific Biosciences

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

The idea behind GrowGeneration Corp and Pacific Biosciences of 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.