Correlation Between Green Thumb and AYR Strategies

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

By analyzing existing cross correlation between Green Thumb Industries and AYR Strategies Class, you can compare the effects of market volatilities on Green Thumb and AYR Strategies 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 Green Thumb with a short position of AYR Strategies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Green Thumb and AYR Strategies.

Diversification Opportunities for Green Thumb and AYR Strategies

0.85

Correlation Coefficient

Green Thumb  AYR Strategies

Very poor diversification

The 3 months correlation between Green and AYR is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Green Thumb Industries and AYR Strategies Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AYR Strategies Class and Green Thumb 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 Green Thumb Industries are associated (or correlated) with AYR Strategies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AYR Strategies Class has no effect on the direction of Green Thumb i.e., Green Thumb and AYR Strategies go up and down completely randomly.

Pair Corralation between Green Thumb and AYR Strategies

Assuming the 90 days horizon Green Thumb Industries is expected to generate 0.46 times more return on investment than AYR Strategies. However, Green Thumb Industries is 2.15 times less risky than AYR Strategies. It trades about 0.0 of its potential returns per unit of risk. AYR Strategies Class is currently generating about -0.1 per unit of risk. If you would invest  983.00  in Green Thumb Industries on September 4, 2024 and sell it today you would lose (54.00) from holding Green Thumb Industries or give up 5.49% of portfolio value over 90 days.

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

Green Thumb Industries  vs.  AYR Strategies Class

Green Thumb Industries

Risk-Adjusted Performance

0 of 100

Very Weak

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

AYR Strategies Class

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AYR Strategies Class has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Green Thumb and AYR Strategies

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

The idea behind Green Thumb Industries and AYR Strategies Class 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.