Correlation Between Green Thumb and CV Sciences

Can any of the company-specific risk be diversified away by investing in both Green Thumb and CV Sciences 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 CV Sciences 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 CV Sciences, you can compare the effects of market volatilities on Green Thumb and CV Sciences 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 CV Sciences. Check out your portfolio center. Please also check ongoing floating volatility patterns of Green Thumb and CV Sciences.

Diversification Opportunities for Green Thumb and CV Sciences

0.41

Correlation Coefficient

Green Thumb  CV Sciences

Very weak diversification

The 3 months correlation between Green and CVSI is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Green Thumb Industries and CV Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CV Sciences 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 CV Sciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CV Sciences has no effect on the direction of Green Thumb i.e., Green Thumb and CV Sciences go up and down completely randomly.

Pair Corralation between Green Thumb and CV Sciences

Assuming the 90 days horizon Green Thumb Industries is expected to under-perform the CV Sciences. But the otc stock apears to be less risky and, when comparing its historical volatility, Green Thumb Industries is 1.22 times less risky than CV Sciences. The otc stock trades about -0.03 of its potential returns per unit of risk. The CV Sciences is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  4.00  in CV Sciences on September 1, 2024 and sell it today you would earn a total of  0.00  from holding CV Sciences or generate 0.0% return on investment over 90 days.

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

Green Thumb Industries  vs.  CV Sciences

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 latest stock price disturbance, may contribute to mid-run losses for the stockholders.

CV Sciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CV Sciences has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, CV Sciences is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Green Thumb and CV Sciences

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

The idea behind Green Thumb Industries and CV Sciences 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.