Correlation Between Green Thumb and Goodness Growth

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

Diversification Opportunities for Green Thumb and Goodness Growth

0.56

Correlation Coefficient

Green Thumb  Goodness Growth

Very weak diversification

The 3 months correlation between Green and Goodness is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Green Thumb Industries and Goodness Growth Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goodness Growth Holdings 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 Goodness Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goodness Growth Holdings has no effect on the direction of Green Thumb i.e., Green Thumb and Goodness Growth go up and down completely randomly.

Pair Corralation between Green Thumb and Goodness Growth

Assuming the 90 days horizon Green Thumb Industries is expected to generate 0.65 times more return on investment than Goodness Growth. However, Green Thumb Industries is 1.53 times less risky than Goodness Growth. It trades about 0.0 of its potential returns per unit of risk. Goodness Growth Holdings is currently generating about -0.02 per unit of risk. If you would invest  987.00  in Green Thumb Industries on September 5, 2024 and sell it today you would lose (61.00) from holding Green Thumb Industries or give up 6.18% of portfolio value over 90 days.

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

Green Thumb Industries  vs.  Goodness Growth Holdings

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.

Goodness Growth Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Goodness Growth Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile 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.

Pair Trading with Green Thumb and Goodness Growth

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

The idea behind Green Thumb Industries and Goodness Growth Holdings 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.